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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.
Following the broad-based S&P 500's (SNPINDEX: ^GSPC ) four-day rally last week, many investors had written off today as perhaps the profit-taking day long before the market even opened for business. Thankfully for the optimists, economic data out of China gave bulls just what they needed to power the S&P 500 to its fifth-consecutive day of gains.
Specifically, giving U.S. markets a boost were China's export figures, which rose a more robust than expected 7.2% in August, all while inflation stayed well below the government's target. Both factors would contribute to the thought process that China's economy may be finding a floor after nearly two straight years of slowing growth. Furthermore, China's top officials have proclaimed confidence in China's ability to meet long-term growth targets ranging from 7.5% to 8%, lending hope that this pillar of the global economy may indeed be back on track.
With Syria news taking a breather for at least one day, the benchmark S&P 500 rose briskly by 16.54 points (1%) to close at 1,671.71.
Heralding the charge higher today is diversified electronics manufacturer Molex (UNKNOWN: MOLX.DL ) (UNKNOWN: MOLXA.DL ) , which jumped by a whopping 31.7% after agreeing to be purchased by privately held conglomerate Koch Industries for $7.2 billion. The overall deal values Molex at $38.50 per share, a 31% premium to Friday's closing price, but $0.10 lower than where it closed today. Both boards have agreed to the deal, but it will still be pending shareholder approval. With Molex missing the Street estimates over the past two quarters, I don't see why shareholders would disapprove of the instant 31% pop.
Beyond Molex, it was once again a day for the homebuilders to show off their gains. PulteGroup (NYSE: PHM ) and the nation's largest homebuilder, D.R. Horton (NYSE: DHI ) , moved higher by 7.5% and 6.5%, respectively, following rival Hovnanian's third-quarter report. Hovnanian has been one of the weakest links, if not the weakest, in the homebuilding industry over the past couple of years, so to see it reporting that average home selling prices are up and cancellation rates are down is a big boost to the remainder of the sector.
Outside of the biggest names in the sector like D.R. Horton and Lennar, which have the strongest balance sheets and some of the beefiest margins, I would still suggest treading cautiously around this sector, with the prospect that the Federal Reserve will potentially take its monthly bond-buying program off the table sooner rather than later. This action could cause interest rates to move even higher, which would be a negative for new home-buying activity.
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