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It's a rare day when the U.S. budget deficit moves the markets, but a surprise surplus of $2.9 billion in January did just that today. According to the U.S. Treasury Department, higher Social Security taxes brought in an extra $9 billion in revenue in January and brought the trailing-four-month budget deficit to "just" $290.4 billion. That's about $60 billion lower than where we were at the same time last year.

Even the most remote possibility that the U.S. budget deficit is narrowing gave the broad-based S&P 500 (SNPINDEX: ^GSPC  ) yet another reason to head higher. On the day, the S&P 500 finished higher by 2.42 points (0.16%) to close at 1,519.43.

Today's best-performing stock was also a complete surprise to everyone: Avon Products (NYSE: AVP  ) . The cosmetics company spiked 20.3% higher following much-better-than-expected fourth-quarter results and plans to seek strategic alternatives for its Silpada jewelry division. Overall, sales dipped 1% to $2.96 billion, slightly below estimates, but it reported an adjusted profit of $0.37 per share, crushing the Street's expectation of just $0.27. Avon is making plans to pull out of the South Korean and Vietnamese markets in order to save $400 million annually by the end of 2015, but it hasn't done much to address its flat sales. Having declined Coty's buyout offer last year, I still have little confidence in Avon's growth plans and would highly suggest not chasing today's move higher.

Home-improvement and building products provider Masco (NYSE: MAS  ) also turned in a double-digit gain, rising 12.5%, after announcing strong fourth-quarter earnings results. Masco reported a 9% increase in sales to $1.89 billion and a $0.04 per share profit as all five of its business segments grew for the first time since the housing downturn began. Wall Street estimates had only called for $1.79 billion in sales and a $0.01 loss!

Masco has been coasting on strong results from such homebuilding companies as D.R. Horton (NYSE: DHI  ) . D.R. Horton, the nation's largest homebuilder, more than doubled its net income year over year, crushed EPS estimates by $0.06, and posted sizable home sales price gains over the previous year. Not surprisingly, Masco's North American sales jumped 12% in the latest quarter compared to a 1% sales decline overseas. Homebuilders such as D.R. Horton and building products providers such as Masco could continue to feed off each other's results domestically and head even higher.

Finally, insurer Assurant (NYSE: AIZ  ) gained nearly 7% after the Federal Housing Finance Agency announced that it's still in the process of evaluating force-place coverage (the insurance borrowers buy when they lapse on an existing policy). Fannie Mae has laid out plans to significantly cut the costs associated with force-place coverage, but this delay announced by the FHFA means Assurant's premiums aren't likely to drop anytime soon. Although the news is a positive for Assurant, it's likely only a short-term boost as even the FHFA agrees that premium costs on force-place insurance costs need to come down.

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Related Tickers

9/28/2016 1:30 PM
^GSPC $2158.32 Down -1.61 -0.07%
S&P 500 INDEX CAPS Rating: No stars
AIZ $90.90 Up +0.19 +0.21%
Assurant CAPS Rating: *****
AVP $5.55 Down -0.19 -3.31%
Avon Products CAPS Rating: *
MAS $34.47 Down -0.35 -1.01%
Masco CAPS Rating: ***
DHI $30.12 Up +0.10 +0.33%
D.R. Horton CAPS Rating: ***