Sometimes you're just left scratching your head, which is exactly what happened today when solid U.S. economic data coupled with disconcerting geopolitical tensions would have been expected to have result in a market stalemate. Instead, the broad-based S&P 500 soared from the get-go.
In the positives column, industrial production moved strongly higher by 0.6% in February which was well ahead of estimates and considerably better than the 0.2% contraction noted in January. This was the strongest gain we've witnessed from the manufacturing sector in six months and was likely aided by a rebound from the extremely cold weather in January which brought growth across half the country to a halt. If this number continues to expand it would bode well for our ongoing domestic recovery.
In addition, the National Association of Homebuilders Market Index also improved to a reading of 47 in March from its prior reading of 46 in February. Although a bit below consensus estimates, this slight uptick does demonstrate that homebuilders are viewing their prospects more favorably. Still, the potential for rising lending rates as the Federal Reserve backs off its economic stimulus known as QE3 has to be a primary concern for the sector.
On the other end of the spectrum geopolitical tensions between Russia and Ukraine continue to near a boiling point. A referendum over the weekend showed that a majority of Ukraine citizens in the Crimean peninsula want to be annexed to Russia. With the exception of Russia, though, all other nations have denounced the vote as having no legal merit. This could be setting the stage for a military conflict or boosted sanctions against Russia that have the potential to negatively impact global growth prospects.
By day's end, though, investors decided that the ongoing geopolitical issues weren't enough to outweigh strong U.S. data and pushed the iconic index higher by 17.70 points (0.96%) to close at 1,858.83.
Decisively leading all companies to the upside today was digital brand and strategy promotion service provider Schawk (NYSE: SGK) which rocketed higher by 35.4s% after agreeing to be acquired by Matthews International (MATW 1.77%) in a stock and cash deal. Under the terms of the deal, Schawk shareholders will receive $11.80 in cash and 0.20582 shares of Matthews' common stock for each share of Schawk that they hold. Based on the company's closing price Friday, the deal valued Schawk at $20 per share. Matthews notes that it expects to achieve $35 million-$45 million in post-merger cost synergies as well as up to $100 million in annual adjusted EBITDA resulting from this purchase. All told, it looks like a solid deal for both parties involved.
Shares of electric vehicle and all-terrain vehicle developer Kandi Technologies (KNDI 7.92%) surged 23.3% after reporting stellar results in the fourth quarter. Revenue rose 92% for the quarter to $50.6 million as EV sales flew higher by 193.7% to $40 million. More importantly, adjusted profits soared 259% to $4.6 million from $1.3 million in the year-ago quarter. Although there were no Wall Street estimates to compare Kandi's progress against, the simple fact that it's now healthfully profitable and is seeing EV sales surging is an encouraging sign for the long run. However, I do have to agree with my Foolish colleague Brian Pacampara that following its greater than 400% run higher over the past year much of its optimism may already be baked into its shares. On that note, I'd prefer to casually watch it from the sidelines.
Finally, shares of clinical-stage biopharmaceutical company Five Prime Therapeutics (FPRX +0.00%) shot higher by 22.6% after announcing an immuno-oncology collaboration with Bristol-Myers Squibb (BMY 0.65%). Under the terms of the deal, Bristol-Myers will gain access to Five Prime's proprietary drug development platform and will choose therapies to develop based on two undisclosed immune checkpoint pathways. In return, Five Prime nets a $20 million upfront payment, up to $9.5 million in research funding, and had Bristol-Myers invest $21 million into common shares of Five Pirme at a 30% premium to Friday's closing price. Five Prime is also eligible to receive up to $300 million in milestone and development payments as well as tiered single-digit and low double-digit royalties if any of its collaborated therapies are approved. Overall this could help vindicate Five Prime's development platform, but only time will tell if that's the case.
