All things considered, today could have been considerably worse.
The broad-based S&P 500 (SNPINDEX: ^GSPC ) experienced another brutal sell-off earlier in the trading session following the Shanghai Composite's worst day in roughly four years. China's credit tightening is causing concern among Wall Street analysts that it could slow growth in the nation most responsible for propping up global materials demand at the moment. That would be a very bad scenario for the U.S. and Western Europe, which are counting on Chinese demand to prop up their still-fragile economies.
With the S&P 500 declining as much as 6% from its closing levels four business days ago, investors should be grateful that it only shed 19.34 points (-1.21%) to close at 1,573.09. Somehow, despite the overwhelming market negativity, three stocks managed to buck the trend notably to the upside.
Topping the list today was acute-care hospital operator Tenet Healthcare (NYSE: THC ) , which added 4.5% after announcing plans to buy Vanguard Health Systems (NYSE: VHS ) for $1.8 billion, or $21 per share -- a 70% premium to Friday's close. The deal allows Tenet to expand into new markets and should go a long way to bolstering its hospital revenue management segment. In addition to obtaining financing for the buyout, Tenet will also assume Vanguard's $2.5 billion in net debt, which it will refinance to a lower interest rate once the merger is completed. While investors are certainly excited about today's deal, I'd think twice about buying into the highly indebted Tenet.
Despite no company-specific news pushing either stock higher, it's pretty easy to understand why rental community REITs are advancing for a second-straight session. As interest rates rise, it makes purchasing a home less attractive from a homebuyer's standpoint. With prospective homebuyer's disincentivized from buying, they'll instead turn to renting. However, with rental vacancy rates near their lows, it allows residential-REITs like AvalonBay and Equity Residential to maintain incredible rental pricing power. The possible end of QE3, which could see rates rise even further, would perfectly play into the hands of these two companies.