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.
Coming into today, many investors knew it would take perfect economic data to push the S&P 500 (INDEXSP:.INX) to its eighth straight day of gains. However, mixed data was the best the U.S. economy could come up with.
On the bright side, weekly initial jobless claims declined by a monstrous 31,000 to a seasonally adjusted rate of just 292,000 — the lowest level since 2006. Fewer jobless claims would imply more people are finding work, which would be good for consumer spending and may imply an ongoing lowering of the unemployment rate.
On the downside, the U.S. Treasury budget deficit of $147.9 billion for August was a hair more than economists had forecast, although it was down notably from the previous month. The U.S. government has certainly made remarkable headway in lowering its budget deficit through the first eight months of the year, but it’s also clear that investors aren’t willing to give an inch when it comes to wider-than-expected deficits.
All in all, investors weighed today’s economic data and determined that the overwhelmingly strong jobs data could mean a Federal Reserve tapering of its quantitative easing program in the very near future. With the highly likely prospect of “easy money” coming to an end, the S&P 500 (INDEXSP:.INX) was pushed lower by 5.71 points (-0.34%) to close at 1,683.42.
Easily beating all other S&P 500 (INDEXSP:.INX) components to the upside today was drugstore Walgreen Company (NYSE:WAG), which rose 5% on the nose after being upgraded to a conviction buy from simply a buy at Goldman Sachs. Goldman believes that Walgreen Company (NYSE:WAG) has the potential for up to $1 billion in cost-savings due to its partnership with Alliance Boots overseas and anticipates that its $400 billion drug wholesale pact with AmerisourceBergen Corp. (NYSE:ABC) could add an additional 10% in savings over the life of the 10-year deal. One thing not really touched on by Goldman that investors will want to keep an eye on is consumer acceptance of Obamacare. Walgreen Company (NYSE:WAG) is among Obamacare’s biggest promoters as an influx of newly insured individuals are going to need a pharmacy to fill their prescription, and why not Walgreen Company (NYSE:WAG), right?