- West Texas Intermediate oil rallied 10% and stocks were off to the races.
- Shorts covered and tech stocks gained again.
- It looked bad at 3 PM but stocks rallied at the close.
West Texas Intermediate oil rose 10% in one day, helping fuel a rally that, while challenged during the afternoon, brought stocks up over 2% on the day.
There was a rather sickening fall around 2 PM, but while that had taken stocks down a few days earlier, buyers stepped in this time, as the Dow finished at 16,654, up 369 or 2.27%, with the S&P 500 rising 47 or 2.43% to 1,987, and the NASDAQ up 115 or 2.45% to finish at 4,812. Markets extended yesterday's rally to end the day well.
For most of the day action looked just like traders hoped it would, with a quick pop up followed by relative stability. The Volatility Index or VIX fell to 26, half its peak, before finishing at 28.43, down 13% for the day.
As the day wore on there was increasing talk of the U.S. economy being “de-coupled” from China, its success not depending on the globe’s other big economy, fueled by news that the second quarter Gross Domestic Product was adjusted to an annual rate of 3.7%. The previous reading last month had been growth of 2.3%. Unemployment claims also fell for the first time in five weeks to 271,000. Claims under 300,000/week are considered an indication of growth.
The Energy Story
U.S. traders have been waiting anxiously to see if a bottom has been put in on oil, which had fallen to near $38 at its low. At the end of trading today the price stood at $42.81, with Brent rising to $47.09.
Energy stocks that had been sold short did best, with Chesapeake Energy (NYSE:CHK) up 10.73% to $7.02. Freeport McMoran (NYSE:FCX), which has both copper and oil assets, had fallen 72% over the course of the year but soared 28% yesterday to $10.19, then picked up another 17% after the bell to nearly 12%.
Tech Stocks Score Again
Tech stocks again rallied, the best example being Amazon (NASDAQ:AMZN), up 3.5% or $17.60 to over $518. It’s now a little over $20 short of its all-time high of $540, after falling to as low as $462 during the early week rout. The shares are up 56% over the last year, having traded below $300 as recently as January.
Apple (NASDAQ:AAPL), meanwhile, was up another 3% to almost $113, Netflix (NASDAQ:NFLX) was up another 6.8% to $117.66 on news that Nielsen (NYSE:NLSN) is looking into creating ratings for its shows, and Tesla (NASDAQ:TSLA) was up 8% or $18.15/share to $243, after the magazine Consumer Reports gave its latest model a perfect score in recent tests. Generally consumer-related tech stocks did better than those selling to businesses. The vast majority of the damage suffered by China’s fall has now been repaired in the U.S. tech sector.
After hours Gamestop (NYSE:GME) also scored after reporting a beat on earnings, $33 million or 31 cents a share, on revenues of $1.762 billion. This handily beat the “whisper number” of 26 cents per share on $1.73 billion in revenue, and sent the stock up in after-hours trading to $48, up over $2.50 from the level where they started the day.
So What Happens In The Markets Today?
While many analysts are worried about the whipsaw of volatility, most market internals finished the day in positive territory, with good volume and fewer deflation worries. A lot of older traders might prefer a quiet day to even a big gain, but the stage seems set for higher prices.
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