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.
It was, yet again, another positive day for the broad-based S&P 500 (SNPINDEX:^GSPC), which has now pushed higher in 10 of the past 11 days and, once again, sits just a fraction off of its all-time high. The impetus for the move higher was, once again, U.S. economic data, led by favorable Consumer Price Index and homebuilder data.
With regard to the CPI, it increased a marginal 0.1% on a seasonally adjusted basis in August, led most by a boost in fuel and energy prices. However, over the course of the past year, the 1.5% gain demonstrates that inflation is well under control, which is great in an environment where consumers are still tepid about pulling out their wallets.
On the homebuilding front, the National Association of Homebuilders/Wells Fargo Index maintained its July reading of 58, the highest level of homebuilder confidence since 2006. As the Fool's Justin Loiseau noted, this was a bit below expectations, which had called for a reading closer to 59, but it nonetheless points to ongoing bullishness in the homebuilding sector.
By day's end, investors had gobbled up this good news, and pushed the S&P 500 higher by 7.16 points (0.42%), to close at 1,704.76, just five points below an all-time record close.
Topping the charts today was grocer Safeway (NYSE: SWY), which jumped 10.5% after Jana Partners reported purchasing a 6.2% stake in the company. According to Jana, it believes Safeway shares are undervalued, and plans to hold talks with Safeway's management to encourage the idea of jettisoning its lower-margin operations to potentially unlock shareholder value. For now, it appears very clear that there's little chance of a Safeway takeover, with the company adopting a poison-pill plan, but there could indeed be strategic moves made in the coming months, which may help boost Safeway's razor-thin margins.
Shares of dialysis center chain DaVita Healthcare (NYSE:DVA) added 4.4% following an announcement yesterday that its subsidiary, DaVita Healthcare Partners, will be merging with Arizona Integrated Physicians. Although no terms of the deal were announced, the move is important for DaVita as it expands the breadth of its hospital coverage to Arizona and, as with most mergers, will likely help lower costs. As the baby-boomer generation begins hitting the retirement age, dialysis centers like DaVita could be in line to see a steady surge in profits.
Finally, in a bit of an odd move, shares of AbbVie (NYSE:ABBV) added 3.9% despite a competitor, Repros Therapeutics (NASDAQ: RPRX), reporting positive efficacy and safety data for Androxal, its testosterone-replacement therapy. Specifically, Repros' Androxal appeared to be superior to AbbVie's AndroGel in the study, yet shares of both companies moved decisively higher. However, let's also consider that AbbVie is much, much more than just AndroGel. With a 3.6% yield, and a forward P/E of just 15, AbbVie investors still aren't paying much for this pharmaceutical star, even after today's pop.