U.S. economic data released this morning made it very clear that rallying for a second straight day would not be in the cards. The Chicago Purchasing Managers Index, a measure of manufacturing activity, fell to 49.7 in September from 53 in August. Any level below 50 represents contraction and is the lowest reading since the recession in 2009.
We also received stress-test data on Spain's banks ,which was less bad than expected, but still nothing to write home about. Half of Spain's 14 banks tested passed the test, although a shortfall of $76 billion in capital was noted. Now that the world has a tangible shortfall figure, the fun really ensues regarding who should pay for it -- Spain's citizens, or the EU as a whole?
Given today's pessimism, the S&P 500 (INDEX: ^GSPC) fell 6.48 points (0.45%) to 1440.67. Let's have a look at some of the companies that had the greatest impact on the S&P 500 today.
Without question, the biggest drag on the S&P 500 from today's weak Chicago PMI data is the coal sector -- specifically, metallurgical coal providers Alpha Natural Resources (NYSE: ANR) and Cliffs Natural Resources (NYSE: CLF), which each dipped around 2%. Metallurgical coal is used to strengthen steel, so providers of this type of coal could struggle to find demand if the manufacturing sector is shrinking. Despite today's news, I stick by my assessment that investors look to the coal sector for some very deep values and, in Cliffs Natural's case, a fantastic dividend as well.
Not every stock pushed the S&P 500 lower today, with consulting firm Accenture (NYSE: ACN) having a remarkably good day, up 7%, following a better-than-expected fourth-quarter earnings report. Although higher taxes affected its bottom-line profits, Accenture's $0.88 profit slid past expectations for a profit of $0.87. Accenture's biggest boost came from its outsourcing business, with currency translations hurting results. Furthermore, Accenture boosted its dividend (paid semi-annually) by 20% and forecasted full-year EPS of $4.22 to $4.30 in 2013, well ahead of Wall Street's consensus of $4.17.
Generic and brand-name pharmaceutical company Watson Pharmaceuticals (NYSE: WPI) was also strongly higher, up 1.7%, on news that it's pricing $3.9 billion in debt to help fund the cash portion of its $5.9 billion purchase of privately held Swiss drug maker Actavis. Today's debt offering moves Watson one step closer to expanding its generic-drug offerings to international markets and should help facilitate the closing of this deal by the fourth quarter.
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