Today started off bleak, with the sequester threatening to put a monkey wrench in the markets' four-year long rebound. However, losses abated slowly throughout the day as investors had time to digest positive economic data domestically, pushing the broad-based S&P 500 (^GSPC -0.21%) into positive territory to end the week.
Domestically, U.S. manufacturing expanded modestly from January, bucking a global trend of slowing production, and easily surpassing estimates. U.S. consumer spending was a bit more mixed, edging up 0.2% in January, due mostly to higher service costs like heating bills. Consumer goods, which really help drive business growth, saw sales drop. These results aren't too surprising given that higher payroll taxes are expected to take a bite out of consumers' discretionary spending budgets.
All told, the S&P 500 finished the day higher by 3.52 points (0.23%), to close at 1,518.20. Don't be fooled by the small move, though, as three stocks were absolute stars today.
Yesterday's worst performer was today's best performer. Intuitive Surgical (ISRG -0.08%), maker of the da Vinci robotic surgical system, roared higher by $43.51, or 8.5%, just 24-hours removed from breaking news that U.S. regulators are investigating the safety of its surgical systems. A report by noted short-seller Citron Research had indicated this exact scenario as one reason it felt Intuitive Surgical's pricing premium wasn't deserved back in December. On the other hand, this morning, I urged Intuitive's shareholders to relax, because recent clinical evidence would suggest that the adverse event profile of the da Vinci surgical system compared to standard laparoscopic surgeries is nearly indistinguishable. Because it's a business built on repetition, I believe Intuitive Surgical will come out in the clear with regard to the probe.
Software-as-a-service cloud provider Salesforce.com (CRM -1.75%) rocketed to a new all-time high, gaining 7.6%, after reporting better-than-expected fourth-quarter results. Quarterly revenue jumped 32%, to $835 million, with subscription and support service revenue totaling 94% of sales. Overall profit rose to $0.51. Wall Street expectations had been calling for $840.8 million in sales, and EPS of just $0.40. The company's 2014 guidance calls for EPS in a range of $1.93-$1.97, which is right in line with expectations. Although the company is garnering big deals and has plenty of recurring revenue, simply being valued at 93 times this year's EPS is enough to make me keep my distance.
Finally, big box electronics retailer Best Buy (BBY -0.66%) jumped 4.6% after the deadline for co-founder Richard Schulze to take the company private has passed. This means that, rather than relying on a white knight like Schulze to step in and save shareholders, Best Buy and its current CEO, Hubert Joly, are going to focus on the continued implementation of turnaround measures. In that regard, Best Buy's prime focus will be on ending "showrooming," whereby consumers would test products in its stores, and then purchase on Amazon.com or any other Internet-based retailer that consistently undercut Best Buy's in-store prices. Best Buy's new platform, which focuses on mobile gadgets and allows associates to price match, should help swing the pendulum back in its direction -- at least for the time being.
