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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 yesterday's monstrous gains in the broad-based S&P 500 (SNPINDEX: ^GSPC ) , optimists decided to take a day off from buying, and allow today's slew of mixed economic data to sink in.
Perhaps the biggest driver of the S&P 500 was the weekly initial jobless claims report, which showed an increase of 15,000 from last week, to 309,000. Although we would prefer to never see this figure heading higher, 309,000 is still considerably lower than we've been at any time over the past six years, and would be conducive to a continuing slow-but-steady reduction in the unemployment rate.
In the positive column, counteracting the rise in weekly initial jobless claims was an existing home sales jump of 1.7% in August to a seasonally adjusted rate of 5.48 million homes, the highest level since 2007. Interestingly, this data would speak in contrast to recent mortgage application data we've witnessed, which shows the consumer being considerably more cautious about refinancing and applying for a new home loan.
By day's end, the S&P 500 had given back 3.18 points (-0.18%), to close at 1,722.34, just its second down day in the past 13 sessions.
Topping the charts today was logistics hardware and software provider Pitney Bowes (NYSE: PBI ) , which added 4.6% despite no company-specific news. If you recall, Pitney Bowes announced the sale of its management services unit to Apollo Global Management (NYSE: APO ) for $400 million in late July, and the company has been crushing short-sellers ever since. The cash infusion from this transaction will allow Pitney Bowes the buffer it needs to continue paying out a yield close to 5% while it focuses on additional cloud-based research that'll sustain its logistics software business for decades to come. As for me, I'm still not convinced given Pitney Bowes' four-year and going streak of revenue declines, and projections for another decline this year. Until there's definitive top-line growth, I'd suggest keeping your distance.
U.S. futures market operator CME Group (NASDAQ: CME ) jumped 4.2% after announcing that it applied with the Commodity Futures Trading Commission to register as a swap-execution facility. If approved, it would give CME Group access to the $630 trillion derivatives swap market, which is moving from a largely private company-to-company platform into an SEF-type exchange. Obviously, we have two positives here. First, we have improved derivative-trading transparency, which should ultimately be good for everyone. But, we also have another opportunity for CME Group to add service fees to its already impressive top-line growth (assuming it gets the OK from the CFTC). I'd continue to monitor this situation closely.
Finally, bio-analytical and measurement solutions provider Agilent Technologies (NYSE: A ) rose 3.4% after announcing its intention to split into two publicly traded companies. The first company (the one that will retain the Agilent name), will be composed of its life sciences, diagnostics, and applied markets operations. The other entity will be composed of its electronic measurement solutions, and would boast about 43% of its projected 2013 revenue ($2.9 billion of $6.8 billion). Spinoffs have done an excellent job in recent years of unlocking shareholder value by making revenue and earnings visibility more transparent, so I would certainly view this spinoff as a positive in its early stages.
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