Today started off bleak, with the sequester threatening to put a monkey wrench in the markets' four-year long rebound. However, losses abated slowly throughout the day as investors had time to digest positive economic data domestically, pushing the broad-based S&P 500 into positive territory to end the week.
Domestically, U.S. manufacturing expanded modestly from January, bucking a global trend of slowing production, and easily surpassing estimates. U.S. consumer spending was a bit more mixed, edging up 0.2% in January, due mostly to higher service costs like heating bills. Consumer goods, which really help drive business growth, saw sales drop. These results aren't too surprising given that higher payroll taxes are expected to take a bite out of consumers' discretionary spending budgets.
Yesterday's worst performer was today's best performer. Intuitive Surgical, Inc. (NASDAQ:ISRG), maker of the da Vinci robotic surgical system, roared higher by $43.51, or 8.5%, just 24-hours removed from breaking news that U.S. regulators are investigating the safety of its surgical systems. A report by noted short-seller Citron Research had indicated this exact scenario as one reason it felt Intuitive Surgical, Inc. (NASDAQ:ISRG)'s pricing premium wasn't deserved back in December. On the other hand, this morning, I urged Intuitive's shareholders to relax, because recent clinical evidence would suggest that the adverse event profile of the da Vinci surgical system compared to standard laparoscopic surgeries is nearly indistinguishable. Because it's a business built on repetition, I believe Intuitive Surgical will come out in the clear with regard to the probe.
Software-as-a-service cloud provider salesforce.com, inc. (NYSE:CRM) rocketed to a new all-time high, gaining 7.6%, after reporting better-than-expected fourth-quarter results. Quarterly revenue jumped 32%, to $835 million, with subscription and support service revenue totaling 94% of sales. Overall profit rose to $0.51. Wall Street expectations had been calling for $840.8 million in sales, and EPS of just $0.40. The company's 2014 guidance calls for EPS in a range of $1.93-$1.97, which is right in line with expectations. Although the company is garnering big deals and has plenty of recurring revenue, simply being valued at 93 times this year's EPS is enough to make me keep my distance.