Another Roller Coaster Day For The Markets - Market This Morning

  • U.S. stocks started strong, but lost ground during the late afternoon
  • Shares gave up half of the previous day’s gains
  • The Bright Spot was in the Clouds

Stocks started off well yesterday, jumping about 1% at the open. But the rally fizzled over lunch and when it became apparent there were no more buyers losses accelerated, the Dow and S&P finishing off nearly 1.5%.

The final numbers saw the Dow Jones (INDEX:INDU) down 1.45%, or 239.11, to finish at 16,253, the S&P (INDEX:SPAL)  going down 27.37 or 1.39% to 1,942, and the NASDAQ (INDEX:COMPX) losing 55.40 or 1.15% to finish at 4,756. 

This broke a global rally. Japan’s Nikkei started things off with a 7.71% gain, followed by Shanghai’s market coming in up 2.24%, and Hong Kong’s Hang Seng moving up 3.94. The good times continued in Europe with England’s FTSE up 1.35%, Germany’s DAX up .31% and the French CAC-40 up .23%. 

Scaled Tech the Star

Notice something in those numbers? The Nasdaq led the way up on Tuesday, and it lagged on the way down Wednesday. Traders were moving money out of all sorts of commodities – oil, gas, gold, but also soybeans, corn and wheat – and moving it into cloud systems where profits scale with growth but costs don’t.

Here’s one example, Amazon.Com (NASDAQ:AMZN). The stock started the day about 20 points short of its all-time high, $537/share. While other stocks fell during the day, some substantially, Amazon hung stubbornly on to a game, finally succumbing in the last hour but winding up down just 65 cents, 0.13%, at 516.89.

Netflix (NASDAQ:NFLX), where costs also don’t grow with customers, had things even better. It never did lose its luster, finishing up $4.23/share, or 4.25%, at $99.18. The news making the stock sing was word that it will expand its offerings into Southeast Asian markets like Singapore, Hong Kong, South Korea and Taiwan early next year. 

The strangest story of the day was at United Continental Holdings (NYSE:UAL), parent of United Airlines, where CEO Jeff Smisek and two other top executives were suddenly shown the door. 

The three were charged with paying a bribe, in the form of regular flights to Columbia, SC,on behalf of David Samson, then the head of the Port Authority of New York and New Jersey, which manages their important hub at Newark, NJ. Oscar Munoz, president of the CSX Railroad (NYSE:CSX), was appointed as Smisek’s replacement and the stock wound up rising 16 cents, or .28%, to finish at $57.67/share.

We Don’t Want Your Commodities

Any other kind of commodity other than computer cycles, however, was worth less as the day went on. West Texas Intermediate oil fell by 3.61% to $44.28/barrel, Brent oil fell 1.88% to $47.64, and natural gas fell another 2.1% to $2.65/mcf. But that wasn’t all. Soybeans were down, wheat was down, cattle and pigs were down on the day.  Metals were also down, gold settling at $1,106/ounce, platinum finishing below $1,005/ounce, and even copper finishing slightly down after trying, and failing, to sustain a rally.

All this meant that companies dependent on commodities of all kinds had a very tough day.  Hormel (NYSE:HRL) finished down 1.66% at $61.06, Exxon Mobil (NYSE:XOM) finished down 2.03% at $72.01, and Barrick Gold (NYSE:ABX) finished down almost 4% at $6.26/share.

So What Happens Now?

There have been indications over the last few days that China might prop up its economy, and that Germany may stop resisting demands for an end to austerity. Those promises have to be fulfilled for stocks to go back into rally mode today.

Dana Blankenhorn Dana Blankenhorn   on Amigobulls :

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