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.
'Tis the year for the never-ending rally... at least according to the broad-based S&P 500 (^GSPC 0.87%), which utilized mixed economic data and strong third-quarter earnings reports to vault to another fresh all-time high.
On the data front, the October U.S. Treasury budget deficit came in at $91.6 billion. While this might seem like a gigantic figure, it's down noticeably from the $120 billion deficit reported in September. A falling federal budget deficit would be great news for investors worried that continuously running in the red is only going to exacerbate our existing debt-ceiling concerns. Keeping this in context, we still have a long way to go to balance the budget, but this is a definite improvement.
On the downside, the Mortgage Brokers Association released its weekly loan origination report and, despite interest rates chugging along at a four-month low, the MBA's reading fell by 1.8%. I've been suggesting that the U.S. consumer has been spoiled with historically low lending rates for the better part of four years, and that they'll simply sit on their hands, even with rates near historic lows anytime there's even the slightest uptick in lending rates. This consumer inaction could eventually hurt the housing sector and economy if it keeps up.
Thankfully for investors, the S&P 500 piggybacked on another day of solid third-quarter earnings releases, and pushed higher by 14.31 points (0.81%), to close at 1,782 on the dot, an all-time high.
Topping all gainers today within the S&P 500 was department store Macy's (M 1.19%), which has been a big beneficiary of the miscues by J.C. Penney and mall-based teen retailers. Macy's tacked on 9.4% on the day after reporting a third-quarter profit of $0.47, which surpassed expectations by $0.08. For the quarter, Macy's leaned heavily on promotions and increased advertising to push same-store sales growth higher by 3.5%, when Wall Street analysts had been expecting a same-store sales improvement of a meager 2.1%. Macy's is sitting in the sweet spot in terms of price and selection, and remains a retailer worth keeping on your watchlist.
Oil and gas exploration and production giant Pioneer Natural Resources (PXD 1.18%) gained 6.9% on the day after it announced the completion of its first horizontal well (and fourth well overall) in the Spraberry/Wolfcamp basin, which yielded a 24-hour peak yield rate of 3,605 barrels of oil equivalent. Pioneer also notes that 74% of its asset yield was oil, which boasts higher pricing and better margins. The 3,605 boe/day yield represents the highest horizontal peak yield in the Midland Basin ever, and serves as a reminder that Pioneer is sitting on a proverbial gold mine of liquid assets.
Finally, automaker General Motors (GM 1.98%) advanced 4.9% following a double-dose of good news. First, we found out that the U.S. government sold an additional $1.2 billion worth of GM stock in October, which means that GM could be completely free of government ownership soon. It's important from an image perspective for General Motors to put its bankruptcy completely in the rearview mirror, and it appears we are very close to that point in time. Also, General Motors announced that it would be moving its international headquarters from Shanghai to Singapore in an effort to consolidate its overseas business. In less fancy terms, it's a money-saving maneuver that's likely to be applauded by investors.
