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.
Can nothing go wrong for the broad-based S&P 500 ? Following an August swoon, today’s economic data and other intangibles certainly appear to be pointing in that direction.
On the economic news front, industrial production for August rose 0.4%, led by manufacturing output, which jumped 0.7% and hurt by utilities output, which dipped 1.5%. Although industrial production actually missed the 0.5% growth forecast by economists, it still represents the fastest rate of expansion we’ve witnessed in six months and would bode well that the manufacturing side of the economy is continuing to get better.
The intangible factor I speak of that has the market abuzz today is news that prospective Federal Reserve chairman nominee Larry Summers has dropped out of the running. As my Foolish colleague Dan Dzombak notes, some investors viewed Summers as being too intricately tied to Wall Street firms, while others took the opposite approach and saw Summers as a political pawn for the U.S. government. With Summers now out of the picture, investors seem pleased that a more neutral candidate may get the job once Ben Bernanke’s term is up.
Wrangling in this pleasant news, the S&P 500 advanced 9.61 points (0.57%) to finish at 1,697.60, the ninth time in 10 days the index has moved higher.
Decisively leading the S&P 500 higher today (and a newcomer to the top-performers list) is specialty metal products manufacturer Allegheny Technologies Incorporated (NYSE:ATI), which jumped 8.1% after announcing the sale of its tungsten materials business to Kennametal Inc. (NYSE:KMT) for $605 million. The deal is a win-win for both parties involved, as the cash will allow Allegheny Technologies Incorporated (NYSE:ATI) to focus on its faster-growing flat-rolled metal businesses, while Kennametal Inc. (NYSE:KMT) will add about $340 million in annual sales to its books and save in the neighborhood of $30 million to $40 million annually through synergies.
Sticking with the theme of aerospace and defense winners, The Boeing Company (NYSE:BA) advanced 3.9% after a Reuters report noted that the company had the winning bid in South Korea for its F-15 Stealth Eagle fighter jet totaling $7.6 billion. What’s noteworthy about the win, as my Foolish colleague Dan Carroll points out, is that The Boeing Company (NYSE:BA) won by default since both Lockheed Martin and Eurofighter’s fighter jets came in above the predetermined budget set by South Korea. Given the ability to meet numerous price points for its customers and government agencies is just another reason why The Boeing Company (NYSE:BA) is a dominant force in the aerospace and defense industry.
