Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Are you sitting down? Listen: The S&P 500 Index (SNPINDEX:^GSPC) dipped below the arbitrarily important 1,700 level today. How the times change! It seems like only last week we were celebrating all-time highs and fawning over that glorious 1,700 figure. Who would have thought the S&P could crater 0.6% on an unassuming Tuesday, ending at 1,697? And whoodathunk it would happen on a day like today, when the trade deficit shrank to multiyear lows, signaling a resurgent American economy? What else happened? Actually, that was pretty much it. Wall Street panicked and sold off on positive economic data, fearing the Federal Reserve will catch on to the recovery.
Three of today's three severest S&P decliners, however, face very real problems. Newmont Mining (NYSE:NEM) slumped 6.5% as gold continued to perform poorly, falling more than 1.5% to end at $1,282 an ounce. The precious metal peaked at more than $1,900 an ounce about two years ago, and Newmont, whose primary business is to mine gold, would love to see those prices return. The stock fell more than 20% last year and is down more than 40% year to date as the depressed prices weighed on results. There's not a whole lot that can be done about a business like this in an environment like that, unfortunately.
Regeneron Pharmaceuticals (NASDAQ:REGN), a $24 billion biotech, also had a rough Tuesday, dropping 6.1% as sales of the company's keystone drug, macular degeneration treatment Eylea, slowed. Expectations were high for today's numbers; the 70% sales growth wasn't quite enough for investors, who'd been spoiled with a 153% revenue jump in the first quarter. Although results disappointed today, Regeneron shareholders may still be in for a lucrative future, with the company hoping to apply for expanded approved uses of its drug later in the year.
Lastly, homebuilder PulteGroup (NYSE:PHM) fell 4% today. It's remarkable that the market's fears -- rational or irrational -- about pending changes in monetary policy can have a very real impact on other sectors and industries. PulteGroup, which, like Newmont, derives much of its value from a larger market it has no control over, is subject to macro moves in the real estate market. With the yield curve steepening on bets that the Fed will start taping quantitative easing measures, markets are figuring that interest rates will start rising sooner than previously expected. This would inhibit homebuyers' ability to borrow, clearly hurting PulteGroup as a result.
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