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.
As has become the general trend since earnings season began slowing down, the broad-based S&P 500 (SNPINDEX:^GSPC) beat the retreat yet again, this time on the heels of potentially weak economic news -- depending on how you view it, of course!
Earlier this morning we heard from the Mortgage Brokers Association that weekly mortgage applications fell by 4.7% week over week even though 30-year mortgage rates pulled back from their highest levels set just weeks ago. On one hand, the 53% drop since the peak in May is scary news for the homebuilding sector, which is just barely getting its feet back on the ground. If demand for housing dries up, so will their pricing power. Then again, lower inventory levels and higher annual home sales than we've seen in years continue to provide optimism that the homebuilding industry is still healthy and will remain as such.
Today's Producer Price Index reading, which was flat month over month, can also be taken two ways. On the bright side, lower inflation is good news for consumers, especially with fuel prices looking like they could be edging higher. Then again, a lack of inflation is bad news for business, because it could signal a loss of pricing power.
By the end of day, the market had digested today's economic data and decided it was a worth a sell-off of 8.77 points (-0.52%), which pushed the S&P 500 to a close of 1,685.39. This marks the sixth loss for the S&P 500 in the past eight sessions.
Finding its way to the top of today's gainers yet again was gold miner Newmont Mining (NYSE:NEM), which rose 6.2% as it benefited from growing market skepticism and a nearly $14-per-ounce gain in spot gold prices. Spot gold is within striking distance of its two-month intraday high of $1,348 an aounce and could again spark interest among traders if it gets back above this mark. For Newmont, it's all about keeping its costs in check, and for investors the rise in spot gold could mean more money in their pockets, since Newmont ties its dividend to the average spot price of gold in the previous quarter.
Shares of mobile-processing and graphic-chip maker NVIDIA (NASDAQ:NVDA) jumped 4.2% on the day, once again nearing a two-year high, less than a week after reporting its second-quarter earnings results. For the quarter, NVIDIA delivered modest revenue growth of less than 3%, while adjusted EPS jumped 23%. The big news shareholders seem to have latched onto has been the resurgence in its graphics business, which has seen record margins in four straight quarters, and its next-generation of Tegra processing chips, which should see strong growth in the second half of this year. With a strong cash position, I still think NVIDIA shares could have a lot of upside left over the long run.
Finally, wholesale power retailer and electric utility provider NRG Energy (NYSE:NRG) added 3.9% in spite of no company-specific news. The move seems to relate more to the fact that necessity items like electricity are a smart buy in markets that are heading lower as their demand and pricing is more or less inelastic. It also comes just weeks after NRG Energy spun off NRG Yield (NYSE:CWEN), which owns generation and thermal assets in the United States. Spinoffs are a good way of unlocking shareholder value by making earnings visibility more transparent, and today's move higher could also partly relate to that fact.