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.
It was another day of generally positive economic data for the markets, with the S&P 500 (^GSPC -0.54%) unable to sustain its early session gains, but luckily able to shake off its steeper midday losses to finish modestly lower for a fourth straight session.
On the plus side, the ADP employment report showed that private job creation soared in November as businesses added 215,000 jobs, about 40,000 ahead of estimates. The creation of more jobs is good news for a recovering economy and would signal that the unemployment rate could keep falling.
The release of the Federal Reserve's Beige Book also lent shareholders some modestly positive news, as the Fed noted that the economy grew at a "modest to moderate pace in early October through mid-November." This is important, because it was feared that the government shutdown would crimp U.S. GDP growth in a big way. The Beige Book release appears to signal that the damage was relatively minor from the shutdown itself on the overall economy.
In addition, new homes sales in October jumped 25% to 444,000 units from 354,000 in September. Falling interest rates certainly helped fuel this jump, but it's still a bit disconcerting how small of a rebound we've witnessed in mortgage loan originations and refinancings, given that we're still very much near record lows in terms of mortgage rates. I think this could be an industry that struggles mightily in 2014 because of the spoiled U.S. consumer.
By day's end, the S&P 500 dipped by 2.34 points (-0.13%) to close at 1,792,81, its fourth straight day of losses, albeit still less than 1% from a new all-time high.
Bucking the trend and vaulting higher by 13.3% was G-III Apparel Group (GIII 1.51%) which surged after delivering a much better-than-expected third-quarter earnings report and delivering a solid full-year forecast. For the quarter, G-III earned $2.85 per share ($0.24 ahead of expectations) as revenue shot higher by 23% to $668.7 million (well ahead of the $620 million the Street expected). Best of all, G-III is seeing these results driven by the sale of full-priced items! Looking ahead, the company is forecasting full-year EPS guidance of $3.50-$3.60 on revenue of $1.73 billion. By comparison Wall Street was sitting at just $1.65 billion in sales on EPS of $3.32. Considering that it's moving merchandise at full price and just picked up G.H. Bass from PVH for only $50 million, I'd say the good times could very easily continue for G-III.
Residential real estate investment trust BRE Properties (NYSE: BRE) surged an uncharacteristic 10.8% after Bloomberg reported, citing information from two unnamed sources familiar with the matter, that Essex Property Trust (ESS 0.86%) has made a $5 billion offer to purchase BRE. Based on this offer, that would value BRE at around $64 per share, or 20% above yesterday's closing price. In response to this news, S&P Capital IQ boosted its price target on BRE to $61 from $55, although it maintained its hold opinion on shares of the company. As for me, I'd suggest doing precisely what my Foolish colleague Brian Pacampara noted earlier and sticking to the sidelines rather than trying to chase this rumored bid any higher.
Finally, nitrogen and phosphate fertilizer producer CF Industries (CF 0.30%) came out smelling like a rose after noting in an SEC filing that it plans to evaluate its dividend strategy over the coming years and could have more than $2 billion available for capital returns and growth efforts. In other words, CF is caving to the pressures of activist hedge fund Third Point, it appears, and agreeing that it will likely boost its dividend in the coming years. Weak nitrogen and phosphate pricing has hurt fertilizer producers in recent months, but the sheer need for improved farm yields given the number of people going hungry in this world make larger fertilizer plays like CF a potentially attractive investment -- especially if its dividend moves even higher.
