High hopes for earning season continued to fuel the S&P 500 (SNPINDEX: ^GSPC ) upward on Tuesday, with the broad-based index advancing for the ninth time in the past 11 sessions. Economic data, on the other hand, was good, but not great.
First up, The Conference Board noted a dip in consumer confidence from a reading of 83.9 in March to 82.3 for April. All things considered, the latest reading still signals a fairly high level of financial optimism for consumers in the short and long term, although some investors may have hoped for more.
In addition, the Case-Shiller 20-city index showed a 12.9% year-over-year increase in home prices for February. This was more or less in line with economists' expectations, but down from the 13.2% year-over-year increase witnessed in January. As with the consumer confidence figures, this was a month-over-month decline, but a nearly 13% increase in home prices is fantastic, and it speaks to tight inventory controls by homebuilders.
By day's end the S&P 500 had digested the mixed but generally positive economic data and climbed 8.9 points (0.48%) to close at 1,878.33.
Topping the charts and leading to the upside was small-cap biopharmaceutical company XOMA (NASDAQ: XOMA ) , which jumped 20.2% after receiving an upgrade to buy from hold by research firm MLV. The upgrade was based on XOMA's valuation, as well as the expectation of positive results from its P3 EYEGUARD-B trial involving gevokizumab for Behcet's uveitis. As always, I would suggest investors largely ignore these analyst moves, which are short-term price drivers and rarely alter our investing thesis. As I noted earlier today, the same firm downgraded XOMA just weeks ago after noting numerous pipeline disappointments. While I personally believe XOMA has a lot of potential with gevokizumab, I'd also suggest waiting for more concrete results before diving in.
Online and mobile-based real estate information marketplace Zillow (NASDAQ: Z ) surged 14.1% on the day, though not because home prices were up by double-digits in America's largest cities year over year. Rather, hedge fund Tiger Global reported in its 13G filing a 9.5% passive stake in Zillow.
This new and substantial position suggests to investors that Zillow might have unlocked value that Tiger Global may want to exploit. While certainly a positive for investors, Zillow is still only marginally profitable and trading for a whopping 153 times forward earnings as of this writing. In other words, it'd be a tough sell, at least for me, to argue that the company has additional upside following today's move.
Lastlt, and returning to the biopharmaceutical sector, Novavax (NASDAQ: NVAX ) gained 14% after reporting positive top-line data from a midstage trial involving its respiratory syncytial virus vaccine. According to its press release, Novavax's RSV-F protein nanoparticle vaccine was demonstrated to be both safe and tolerable in trials, consistent with its previous phase 1 results, and delivered significant increase in RSV-F antibody levels across all dosages and formulations. As with XOMA, there's a lot of potential for Novavax's pipeline, but it's still very early in development. Until we get into later-stage trials and can focus more on the efficacy of its vaccines, investors might want to tone their optimism down a bit.
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