This Is the Reason the S&P 500 Rally Kicked Into High Gear

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The markets didn't quite know what to think of this morning's ADP National Employment Report that highlighted a better-than-expected addition of 162,000 private sector jobs in September; however, a mid-afternoon report out of Europe changed that in a hurry. According to European Union regulators, EU banks have raised an additional $265 billion in capital since December by issuing capital, withholding dividends, and reducing riskier holdings. With the ADP report signaling a possible stabilization in U.S. job growth and EU banks doing what's necessary to meet new capital regulations, the S&P 500 (INDEX: ^GSPC) had a weight of worry lifted off its shoulders, rising by 5.24 points (0.36%) to 1450.99.

Let's have a quick look at some of the stocks most directly responsible for influencing the S&P 500's movements today.

Homebuilders are off to the races across the board today. Both Lennar (NYSE: LEN) and D.R. Horton (NYSE: DHI) are leading the charge higher to the tune of a 7% gain for Lennar and 6% for D.R. Horton. The impetus for the surge higher was a report from the Mortgage Brokers Association that noted a 16.6% seasonally adjusted increase in mortgage applications for the week ended Sept. 28. The MBA also highlighted that its refinancing index hit its highest levels since April 2009. That's great news for homebuilders, because it signals more people are buying homes and banks are apparently more willing to lend.

Online streaming company Netflix (Nasdaq: NFLX) is also enjoying a rare day in the spotlight following a "buy" reiteration from Citigroup analyst Mark Mahaney. Netflix shares soared 11% after Mahaney proclaimed the company to be at a "highly reasonable valuation." However, I wouldn't allow your excitement or emotions to get the better of you. I established a long list of concerns earlier in the year that stand ready to derail any rally in Netflix, and I'd suggest taking Mahaney's comments with a grain of salt.

Hewlett-Packard (NYSE: HPQ) , on the other hand, was responsible for putting up the biggest rotten egg of the day, with its shares giving up a whopping 13%. CEO Meg Whitman, in a meeting with analysts, guided HP's 2013 adjusted profit projections (excluding restructuring costs) to a range of $3.40 to $3.60, well below the $4.18 Wall Street had been forecasting. Whitman's multiyear turnaround plan entails laying off 27,000 employees by 2014 to save between $3 billion and $3.5 billion annually. Not exactly known as an innovator, Whitman, eBay's former CEO, still has a lot to prove to investors before she gets their nod of approval. However, I can't help pointing out that HP is valued at just 4.3 times 2013 earnings according to the midpoint of Whitman's estimate. There just might be a value play here after all.

A streaming success or a cascading waterfall?
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