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.
Let's make it eight out of the past nine days that the broad-based S&P 500 (^GSPC 1.13%) has vaulted higher, and chalk up another all-time record high for the index!
As we enter the heart of earnings season, it's clear that investors have liked what they've seen so far from the companies that have delivered their reports. A majority of S&P 500 components have topped expectations to this point, and my only concern would be whether they're doing this with cost reductions and share buybacks rather than genuine organic growth.
We also this morning received nonfarm payroll data that had been postponed for two-and-a-half weeks due to the federal government shutdown. All told, nonfarm payrolls increased by just 148,000 in September, which was below economists' forecasts for an increase of roughly 180,000. However, a reduction in the labor force allowed the unemployment rate to drop slightly to 7.2%, a notch below expectations from Wall Street that pushed the unemployment rate to a six-year low.
By day's end, the S&P 500 had racked up another double-digit point advance, gaining 10.01 points (0.57%) to close at the new record high of 1,754.67.
It should come as no surprise that the leading gainer within the S&P 500 today vaulted higher by 11.6% after handily topping estimates in the third quarter. The company in question would be none other than appliance maker Whirlpool (WHR 0.90%) which delivered a quarterly profit of $2.72 per share as margins improved domestically and European sales finally showed signs of stabilizing. Furthermore, Whirlpool was able to brush off any fears that a housing slowdown or the government shutdown would stymie sales by boosting its full-year earnings-per-share forecast to $9.90-$10.10, which is up slightly from its guidance in the previous quarter. Whirlpool is certainly a tough company to bet against given its strong brand name, but I still remain a bit concerned that housing in the U.S. isn't quite as healthy as the market figures would make it seem. If interest rates or home sales weaken even slightly, it could put pressure on Whirlpool's domestic sales next year.
Global aluminum giant Alcoa (AA) -- yes, Alcoa! -- nearly took down Whirlpool for the day's largest gain, adding 8.8% after announcing a joint venture with Russia's VSMPO-AVISMA, a titanium ingot manufacturer, to supply aluminum and titanium products to aircraft manufacturers around the world. This is an important deal for Alcoa because it's struggled with its pricing power and costs in recent years. The joint venture will expand Alcoa's appeal to aircraft companies via a wider product line and should help reduce its expenses. If you haven't been following Alcoa previously, perhaps now is the time to add it to your watchlist.
Finally, oil and gas exploration company QEP Resources (QEP) rose 5.8% after hedge fund Jana Partners disclosed that it had taken a 7.5% stake -- 13.5 million shares -- in the company. The buzz from shareholders comes from the SEC filing which notes that Jana has met with QEP's management to talk about a possible breakup of the company. Specifically, Jana would like to see QEP spin off its midstream operations from its exploration and production side of the business. As we've witnessed over the past two years, spinoffs are a great way of unlocking shareholder value as they allow investors to more transparently see how an energy company grows its top and bottom lines. QEP can't comment on the potential for a breakup since it's within the quiet period before its third-quarter release, but it's certainly a situation worth watching.
