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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.
After roaring to new highs by mid-week, the broad-based S&P 500 (SNPINDEX: ^GSPC ) edged lower for a second straight day, after a trio of weak economic data and readings did the iconic index in.
Pushing the S&P 500 lower was a fairly significant drop in housing starts, which dipped 9.8% to a seasonally adjusted annual rate of 999,000 in December from 1.11 million in November. This figure of 999,000, in spite of the sizable drop, is still high relative to where we've been during the previous five years. It could, however, be a wake-up call that higher lending rates could stamp out rapid housing industry growth in the interim.
December's industrial production was also right in line with economists' expectations with an expansion of 0.3%, but this figure is down from 1% expansion in November. Similar to housing starts, this figure would point to a recovering U.S. economy, but it also may signal that this rebound isn't as robust as once expected.
Finally, the Michigan Consumer Sentiment Index for January dipped to a reading of 80.4 from the reading of 82.5 in December. This index combines opinions for at least 500 people each month with regard to their own near-term and long-term outlooks. With this reading falling, it's safe to assume that the opinions of consumers about the health of the economy is waning a tad.
By day's end, the S&P 500 had dipped by 7.19 points (-0.39%) to close at 1,838.70.
In spite of the second day of weakness, NII Holdings (NASDAQOTH: NIHDQ ) , a wireless services provider in Latin and South America, advanced 24.2% after announcing a deal with Apple (NASDAQ: AAPL ) to bring the iPhone 5s and iPhone 5c to its Nextel network of customers in Brazil beginning Jan. 31. NII also forged a deal with Telefonica earlier this week to jointly develop their networks in Mexico and Brazil, so each can reach a greater number of customers. The deal is equally important to Apple, as it pushes heavily into BRIC countries with its latest smartphone. With NII pushing toward modern technology and broader network reach, it has made some very smart strategic moves this week. I still, however, can't get past the company's enormous debt load, and would strongly suggest you stick to the sidelines until it gets back to profitability and makes serious strides in reducing its debt.
Shares of genetic analysis platform designer Pacific Biosciences of California (NASDAQ: PACB ) vaulted higher by 14.4% despite a lack of company-specific news... today, at least. Earlier in the week, the life sciences sector was abuzz with the introduction of a new genetic analysis tool from Illumina, which could get the job done for $1,000, signaling just how far genome analysis tools have come over the past decade. Pacific Biosciences has demonstrated a steady uptrend in its top line due to increased acceptance of its RS II Sequencing Systems. Should the company again deliver double-digit sequential quarterly-revenue growth, investors might consider pushing the company even higher. Pacific Biosciences is set to report its fourth-quarter and full-year results on Feb. 4.
Finally, Cell Therapeutics (NASDAQ: CTIC ) continued its multi-week romp higher, up an additional 13.8%, following the release of its 2014 outlook and drug portfolio progress on Tuesday. Cell Therapeutics covered many of the factors we already knew, such as the clinical hold removal on tosedostat by the Food and Drug Administration, and a positive reimbursement recommendation from NICE in the U.K. in December. What really excited investors was the 2014 outlook, which includes the initiation of a second phase 3 trial for pacritinib, as well as the top-line results from the first trial, the seeking of a partner for Pixuvri outside of Western Europe, and completing enrollment for its phase 3 Opaxio study as a maintenance therapy for ovarian cancer. It's certainly going to be a busy year for Cell Therapeutics, so investors should be ready for increased volatility.
If your holdings aren't among the day's top performers, perhaps you aren't thinking far enough outside the box!
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