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.
The big bad S&P 500 (SNPINDEX:^GSPC) huffed and puffed with all its might and a good amount of positive economic data, but it still couldn't blow skeptics out of the way on Wednesday, sending the index to its fifth-straight loss.
It was a pretty positive day for economic data for a change, with new homes sales rising nearly 8% in August to a seasonally adjusted annual rate of 421,000. However, that still didn't make up for the steep drop-off in July when surging interest rates put a major damper on home purchases and mortgage originations.
In addition to the home sale data, U.S. durable goods orders topped most forecasts by rising 0.1% in August. That may not sound like much, but given last month's huge decline in durable goods orders I believe investors will gladly take it. The big winner again was automakers, which continue to see strong sales despite generally weak consumer spending habits.
Despite this good news, the looming government shutdown on Tuesday because of Congress' inability to balance the federal budget, the potential for a debt-ceiling default shortly thereafter, and Federal Reserve commentary overhang from last week added too much weight to the S&P 500's shoulders and pushed it lower by 4.65 points (-0.27%) to close at 1,692.77.
Leading the charge higher was storage device maker Seagate Technology (NASDAQ:STX) which rose 5% after being added to Longbow Research's "best ideas list" at the expense of Western Digital, which was dropped from the list (although both companies retain their buy rating with Longbow). The covering analyst, Joe Wittine, noted that Seagate's earnings-per-share estimates should rise over the coming quarters with a huge opportunity in solid-state drives, and that shareholders should benefit from Seagate's ongoing share repurchase program which will help boost EPS by lowering the amount of outstanding shares. As always, I'd suggest not letting one analyst's comments affect your long-term thesis, but this just happens to be one I agree with wholeheartedly. With a surge in big data centers expected, companies such as Seagate and Western Digital stand to benefit on both sides of the coin, making storage sales to PC users as well as enterprise customers running big data centers.
Life insurance, long-term care insurance, and annuity provider Genworth Financial (NYSE:GNW) advanced 3.9% after announcing yesterday that it had begun filing for premium rate increases of 6%-13% for Privileged Choice and Classic Select policies sold between 2003 and 2012. In sum, Genworth is seeking a rate boost on approximately $800 million worth of annualized in-force premiums. The move is being made because life expectancies are improving (which for most businesses would be a good thing, but not in this case), and because fewer policies have lapsed. If the rate increase is approved, you can expect a nice bump in Genworth's bottom line next year.
Finally, broadcasting and publishing company Gannett (NYSE:GCI) jumped 3.6% after Belo (UNKNOWN:BLC.DL) shareholders approved the buyout of their company by Gannett for $2.2 billion, inclusive of debt. This was a big hurdle for Gannett as some on the Street had speculated the premium it offered wasn't high enough. The deal is expected to close by the end of 2013 so long as regulators approve. The Belo purchase provides Gannett with a discernible move away from publishing which should give it the ability to grow organically, something its publishing business has lacked in recent years. Keep Gannett on your Watchlist in the meantime.