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This Is the Reason the S&P 500 Is Sending Mixed Signals

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The simple fact that the broad-based S&P 500 (SNPINDEX: ^GSPC  ) didn't nosedive this morning is a testament to investor optimism. Fiscal cliff negotiations are going absolutely nowhere, as President Obama has made his position clear that he won't sign into law any compromise that doesn't include higher taxation on the wealthy.

In addition, the news out of Italy that current Prime Minister Mario Monti is planning to step down early would normally have been an impetus to send the markets screaming lower -- but somehow it didn't. Italy is struggling under a crippling amount of debt and attempting to implement aggressive spending cuts, and the departure of its prime minister probably isn't going to sit well with investors in Italy.

On the day, the S&P 500 vacillated within a tight range, finishing up 0.48 points (0.03%) to end at 1,418.55.

Although today wasn't ripe with headline news stories, specialty chip and memory products suppliers Micron Technology (NASDAQ: MU  ) and NVIDIA (NASDAQ: NVDA  ) each pushed higher by better than 3%.

Micron's rally came on the heels of a news report from DigiTimes on Friday that highly commoditized DRAM memory chips have seen prices rally significantly off their lows, leading investors to believe that the worst may be over for memory chip producers. Valued at just 85% of book value and 11 times next year's EPS, the price may indeed be right for a Micron rebound.

NVIDIA's push higher appears to be more Santa Claus-based. NVIDIA, which supplies graphics cards used in smartphones and PC's, will be relying on discounted PC sales and greater access to smartphones to push unit volume through the roof this holiday season. Pricing for NVIDIA's graphics chips, just like Micron's DRAM, is sketchy at best, but demand appears to be strong heading into the holiday season.

Leading to the downside were travel specialists (NASDAQ: PCLN  ) and Expedia (NASDAQ: EXPE  ) , which descended 5% and 3.6%, respectively, following an analyst downgrade by Deutsche Bank on Priceline.

The covering analyst, Ross Sandler, downgraded to "hold" from "buy" and noted that increased competition from Expedia, as well as mobile competition and the potential for Google (NASDAQ: GOOGL  ) to enter the playing field, bode poorly for Priceline's immediate growth prospects. Sandler will be looking for international growth to reaccelerate as one key to reverse his near-term pessimism. Poor Expedia was merely an innocent bystander, falling in sympathy with Priceline even though its international growth is outpacing that of Priceline at the moment.

NVIDIA was ahead of the curve launching its mobile Tegra processor, but investing gains haven't followed as expected, with the company struggling to gain momentum in the smartphone market. The Motley Fool's brand-new premium report examines NVIDIA's stumbling blocks but also homes in on opportunities that many investors are overlooking. We'll help you sort fact from fiction to determine whether NVIDIA is a buy at today's prices. Simply click here now to unlock your copy of this comprehensive report.

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Related Tickers

10/21/2016 4:00 PM
EXPE $127.58 Up +2.92 +2.34%
Expedia CAPS Rating: ***
MU $16.94 Down -0.27 -1.54%
Micron Technology CAPS Rating: ***
NVDA $67.54 Down -0.19 -0.28%
Nvidia CAPS Rating: ****
PCLN $1467.39 Down -0.90 -0.06%
Priceline Group CAPS Rating: ****
GOOGL $824.06 Up +2.43 +0.30%
Alphabet (A shares… CAPS Rating: *****