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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
For a third straight day the S&P 500 (SNPINDEX: ^GSPC ) and investors did their best two-step toward the exits on the heels of cautious Federal Reserve comments, weak overseas markets, and disappointing economic data.
Carryover of yesterday's comments from Fed presidents in Chicago and Atlanta continued to trouble investors who are skeptical that lending rates will remain low once the U.S. central bank begins paring back its monthly bond-buying program. After the first time we heard about a potential rollback in QE3 from the Fed, lending rates soared more than 100 basis points. The fear that lending activity in housing and from businesses could grind to a halt is very real. On the heels of these comments, overseas markets, especially Japan's Nikkei, sold off hard overnight.
Also, economic data released today didn't exactly excite investors. Although today's data wasn't the highest on the ladder in terms of importance, lower-than-expected crude inventories gave even more reason for oil and gasoline prices to head even higher. In addition, consumer credit demonstrated a rather large month-over-month drop of 30% to $13.8 billion. While taking on debt isn't necessarily a good thing, consumer credit figures are often a good gauge of the health of the American consumer. If consumer credit figures are falling, retailers may struggle to meet Wall Street's estimates in the third-quarter.
By day's end, the S&P 500 had fallen by 6.46 points (-0.38%) to close at 1,690.91.
Bucking the move lower in the biggest way today was information technology provider Computer Sciences (NYSE: CSC ) , which advanced 8.5% after reporting impressive first-quarter results. Although revenue fell 10% year over year to $3.26 billion, and was a clean $300 short of the Street's expectations, CSC's bottom-line profit of $0.91 absolutely crushed the $0.69 expected by analysts thank to heavy cost-cutting. Furthermore, CSC divvied out full-year EPS guidance of $3.50-$3.70 as compared to the current consensus of $3.51. The threat of a government spending slowdown certainly does exist, but as we've seen from today's results, it's been largely overexaggerated.
Shares of biotech behemoth Amgen (NASDAQ: AMGN ) tacked on 6.8% today after reports began swirling earlier in the day that it has raised its offer price for Onyx Pharmaceuticals (UNKNOWN: ONXX.DL ) to $130 a share, or $9.5 billion. If these rumors prove accurate and Amgen is finalizing a deal, it would represent a boost of $10/share over its previous offer nearly six weeks ago and it would bring multiple myeloma drug, Kyprolis, which has peak sales potential of around $3 billion, into Amgen's portfolio. I probably wouldn't suggest buying or selling either of the stocks on these rumors, but I certainly would keep a close eye on this situation.
Finally, shares of cable and broadband operator Cablevision (NYSE: CVC ) added 3.4% despite no company-specific news today. There has, however, been buzz throughout the sector for months that Charter Communications is looking to make an acquisition. In the cable industry consolidation helps add to pricing power which competition has made more difficult to exert over the year. Also, increasing streaming content is drastically boosting the cost of marketing to retain customers. Like Amgen and Onyx, this is news that wouldn't necessarily cause me to buy or sell Cablevision here, but I'd keep it close on my Watchlist for investment thesis-changing news.
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