It hasn't happened nearly as often as optimists would like to see in recent weeks, but improving economic data matched the move higher in the broad-based S&P 500 today, and gave new life to bulls that this correction may indeed be nothing more than a blip in a continuous uptrend.
The big news today was the weekly jobless claims report, which delivered a drop of 11,000 from the previous week to a seasonally adjusted 346,000. There's certainly going to be some fluctuation in these figures, but anything below 400,000 is widely believed to be a sign of a strengthening job market by economists.
Although there were some wild swings today in the S&P 500, the index ultimately finished the day higher, by 13.66 points (0.85%), to close at 1,622.56. As you might expect, following the large two-day drop for the markets, there were quite a few big movers today.
Biotechnology superstar Regeneron Pharmaceuticals topped the charts, tacking on 9.8% after it, and partner Bayer, reported positive late-stage results for Eylea in treating myopic choroidal neovascularization, or mCNV. In trials, those patients receiving Eylea had a mean improvement in best-corrected visual acuity of 12.1 letters after 24 weeks compared to the control arm, which delivered a loss of two letters. Eylea is already a blockbuster drug approved by the Food and Drug Administration to treat wet age-related macular degeneration and macular edema following central retinal vein occlusion, and now looks poised to add a third indication in treating mCNV. With baby boomers now reaching retirement age, the need for ophthalmic treatments is only going to increase, putting Regeneron in the driver's seat.
Shares of fiber optic company JDS Uniphase shot higher by 8.4%, led by peer Ciena , which surged after it topped Wall Street's expectations in the second quarter and forecast third-quarter revenue well above the consensus. What's really noteworthy about Ciena's quarter was that the majority of revenue growth came from the U.S., not overseas. This speaks to what I've been saying for months about the next cycle of infrastructure growth trickling down from service providers like AT&T down to fiber optic companies like JDS Uniphase, and into individual networking parts providers. We are witnessing the next boom in infrastructure spending, and I don't feel it's anywhere near too late to still get in on the gains.
Finally, homebuilder PulteGroup rallied 4.7%, in spite of no company-specific news. This appeared to be more of a rebound rally than anything else, as investors have demonstrated their concerns in recent days about whether the rally in homebuilders was too much, too soon. While home prices have been strong, and inventories remain low, the prospect of the Federal Reserve's bond-buying program tapering off sooner than later could stymie loan growth, and bring the housing sector to a grinding halt. I certainly feel the risk far outweighs the reward with PulteGroup at the moment.
Keep your eyes on the horizon
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