If you haven't noticed, earnings season is starting to kick into full swing, and investors apparently like what they're seeing thus far, with the broad-based S&P 500 (SNPINDEX:^GSPC) surging to its third consecutive gain.
In addition to a number of positive earnings reports which pushed the market higher, we were dealt a handful of economic data – some good, some bad.
First off, it was a big day for housing industry data, with the March report on housing starts and build permits. The good news was the nearly 3% rise in housing starts for March to a seasonally adjusted rate of 946,000. On the flipside, building permits in March fell to an annual pace of 990,000 units, which is down from the 1,014,000 reported in February. In other words, the homebuilding and construction sector continues to be very unpredictable.
We also received the weekly loan originations update from the Mortgage Brokers Association which showed a 4.3% increase from the previous week. This is definitely a good sign for mortgage servicers and the housing sector in general, but putting things into perspective loan originations (refinancing and new mortgage originations) are way down from their May 2013 peak.
We also had the release of March's industrial production data which showed an expansion of 0.7%. Although this was down from the 1.2% expansion in February, it's still an encouraging sign that the manufacturing sector is expanding.
But, perhaps the biggest catalyst was the release of the Fed's Beige Book which confirmed that the weather and not some endemic slowdown in corporate growth was the reason behind the early quarter growth slump.
By days end the S&P 500 had decisively risen by 19.33 points (1.05%) to close at 1,862.31. The index has now erased more than half of its week-and-a-half long swoon lower.
Topping the charts and leading all companies to the upside is small-cap biopharmaceutical company Zogenix (NASDAQ:ZGNX) which roared higher by 20.5% after announcing a Massachusetts U.S. District Court decision that will prevent the implantation of a ban on the company's severe pain medication Zohydro ER. In late March Massachusetts' Gov. Deval Patrick banned Zohydro ER on fears that the therapy would be abused, but today's ruling made sure to set a precedent that states can't simply pick and choose what drugs can and cannot be sold. While it's certainly a positive for Zogenix, ongoing concerns about its abuse potential could make it a potentially risky bet for investors.
Sticking within the biotech sector, shares of ImmunoGen (NASDAQ:IMGN) soared 11% after research firm Canaccord Genuity initiated coverage on the company with a "buy" rating and a $20 price target, which represents better than 55% upside to yesterday's close. The catalyst for Canaccord's coverage is expected positive results from a phase 3 trial involving antibody-drug conjugate Kadcyla, which is being developed in collaboration with Roche (NASDAQOTH:RHHBY), for HER2-positive metastatic breast cancer. The results should be out in the latter half of this year and Canaccord sees a greater than $7 billion opportunity for adjuvant breast cancer therapies like Kadcyla. While I'm always leery of putting too much weight (if any) behind analyst ratings, this is one where I happen to agree in full. ImmunoGen has a diverse pipeline and a number of key partnerships which may give it an above average chance at long-term success.
Finally, 3-D printer developer and on-demand parts service company voxeljet (NYSE:VJET) advanced by 9.3% after announcing the closing of its share offering of 3 million ADS shares at $15 per share.
Voxeljet had already taken a beating by pricing these shares well below its closing price last week when the offering was announced, so today's move higher appears to signify confidence in the $41.4 million in gross proceeds raised, as well as the elation of putting this dilutive offering in the rearview mirror. While voxeljet's top-line growth has the chance to outpace its industry peers (primarily because of its small size), the quarterly losses are expected to continue for some time which puts me off of wanting to have anything to do with this stock.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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