The economy huffed and puffed with as much good economic news as it could muster today, but it wasn't enough to get any major response out of the broad-based S&P 500 (^GSPC 1.20%).
A better-than-expected rise in industrial production in December (0.3% vs. expectations of 0.2%) and an in-line Consumer Price Index -- signaling that inflation is well under control -- weren't enough to give the broader market a boost. Even the midday release of the Fed's Beige Book, which noted a rebound in retail sales, automotive sales, and housing, wasn't good enough for Mr. Market.
Part of the blame goes to the uncertainty surrounding the ongoing U.S. debt ceiling crisis, but I'm going to at least place some of the blame on Boeing (BA -0.76%), which has encountered numerous mechanical problems with its 787 Dreamliner in recent weeks. Japan Airlines and All Nippon Airways both grounded their 787s yesterday following battery and fuel tank issues. Although Boeing has assured its customers that the planes are safe, it nonetheless presents a PR nightmare for the company.
Including the Boeing drag, the S&P 500 ended fractionally higher by 0.29 points (0.02%) to close at 1,472.63.
Like yesterday, the overall movement of the markets was mixed, but there were definitely some big movers to the upside within the S&P 500.
Wealth management and financial solutions provider Genworth Financial (GNW 1.50%) was the big winner today, up as much as 14% at one point, after announcing a plan to separate its mortgage insurance guaranty business. The move is designed to reduce Genworth Mortgage Insurance Co.'s (GMICO) risk-to-capital and need for cash. Genworth's three-point plan involves transferring ownership of its European subsidiaries to GMICO, enabling the ability to form a "NewCo." under adverse market conditions so it can continue to write new business, and free GMICO from the being under the umbrella of the indenture that covers the company's senior notes. All told, this looks like a smart move for a company still rebounding from the recession.
Alcohol producer Constellation Brands (STZ 0.74%) had an equally impressive day, rising 6%, following analyst coverage by research firm Buckingham. The company initiated Constellation with a "buy" rating and a $45 price target. As usual, I wouldn't put too much emphasis on the short-term moves created by analyst coverage, but I can somewhat see the appeal of the "buy" rating given the inelasticity in the price of alcoholic beverages during economic slowdowns. Then again, without acquisitions I fail to see where Constellation's organic growth will effectively push its share price past $40. I consider this spirits maker fully valued here.
Finally, Apple (AAPL 0.64%) staged a nice reversal, rising 4%, from its two-day swoon on the heels of comments from Wedge Partners analyst Brian Blair, who proclaimed The Wall Street Journal's report of iPhone parts order reductions was "simply erroneous." Blair opined that seasonal production cuts of 15% to 25% are normal for this time of year and raised his annual iPhone production forecast to 180 million units from 163 million.
It'd be an understatement to say that everybody has an opinion on Apple right now, and, to add my two cents, I'd say that even if a slowdown is taking place, Apple's incredible $121 billion cash position and approximately $40 billion in annual free cash flow are enough reason to buy this tech innovator.
