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.
And just like that, the broad-based S&P 500's (^GSPC -0.58%) five-day losing streak is over!
Heralding the charge higher today was a considerably stronger-than-expected jobs report from the U.S. Department of Labor for November. The latest data showed the addition of 203,000 nonfarm payroll jobs, while economists had expected a gain of somewhere around 185,000 to 190,000. On this strong figure, the unemployment rate dipped to a fresh five-year low of just 7%. Although yesterday was spent wallowing in "what ifs" regarding actions the Federal Reserve might take with its monetary easing program, investors' consensus today is that even if the Fed does begin tapering soon that the jobs market is strong enough to withstand weakness in select sectors.
The early signs for consumer sentiment also are encouraging; the initial reading for December came in at 82.5, which is significantly higher than the previous reading of 75.1. If consumers feel more positive about the U.S. economy then they'll be more likely to reach into their wallet and spend this holiday season. Retailers are certainly expecting a tough holiday, so this news should give them all a modest boost.
For the day, the S&P 500 was higher by 20.06 points (1.12%), ending its more than weeklong losing streak and closing at 1,805.09, just a fraction away from another all-time high.
Leading the pack higher today among individual stocks was struggling action sports and California lifestyle retailer Pacific Sunwear (PSUN) which added 18.8% after reporting third-quarter earnings results. Normally earnings time is when Pacific Sunwear shareholders assume the position of an ostrich and bury their head in the sand, but yesterday's rollout was a bit different. For the quarter Pacific Sunwear lost $0.05 per share as revenue declined 4% to $206.6 million. The earnings-per-share loss matched Wall Street's expectations, while the revenue figure topped by $1.6 million. Furthermore, looking toward the highly lucrative holiday quarter Pacific Sunwear forecast $216 million-$225 million in revenue, right in line with the $218.7 million consensus from the Street. In other words, Pacific Sunwear didn't miss and shares are shooting higher because of it today. Still, I wouldn't bet on a sustained turnaround anytime soon given that Pacific Sunwear has had all sorts of issues with its inventory for years.
Specialty biopharmaceutical company Auxilium Pharmaceuticals (NASDAQ: AUXL) rallied 12% after announcing the approval of Xiaflex as the lone FDA-approved treatment for Peyronie's disease (PD), a curvature deformation of the penis that is greater than 30 degrees. This is Xiaflex's second approved indication and will give it full market potential in the PD indication. Auxilium noted that some 65,000 to 120,000 cases of PD are diagnosed annually, but few treatment options are ever open to patients. The big challenge now will be to encourage these individuals and other men with undiagnosed PD to seek treatment. With Auxilium valued at just 18 times forward earnings and this new revenue boost likely on the way, I'd certainly encourage biotech-savvy investors to dig a bit deeper here.
Finally, television broadcaster Gray Television (GTN 2.17%) surged 10.1% on the day despite a lack of company-specific news. As a refresher, though, Gray Television did announce, in partnership with Excalibur, the acquisition of a dozen TV stations from Hoak Media and Parker Broadcasting a little more than two weeks ago. That deal prompted Moody's to reaffirm its credit rating and positive outlook on Gray and led Wells Fargo to boost price target on Gray from a range of $7-$9 to a new range of $12-$14. Even following today's rally Gray is still relatively inexpensive at less than 11 times forward earnings, but I'd throw caution to the wind with close to $800 million in net debt.
