- It was a quiet day on Wall Street as people watched the Pope and Chinese Premier.
- Oil was down, and stocks in general finished down but in a narrow range.
- Buyers Wanted.
For the first time in a long time, the markets had a relatively quiet day, with the VIX Volatility Index falling to 22.10 but, perhaps more important, trading within a narrow range.
For the day the Dow Jones Industrial Average (INDEX:INDU) was down .31%, or 50.58 to finish at 16,280, the S&P 500 (INDEX:SPAL) was down .20%, or 3.98, to close at 1,929, and the Nasdaq Composite (INDEX:COMPX) was down .08%, or 3.98, to finish at 4,753. More important, the trading range was relatively narrow, a low reached at lunchtime after a high around 11, followed by gentler rises and falls during the afternoon.
The news that came in was not generally good. China’s slowdown is worsening, and India may be slowing as well. Volkswagen (OTC:VLKAY) “Dieselgate” scandal is now seen as a threat to the whole German economy, which had been the economic engine of Europe. Everyone hates Martin Shkreli, the price-gouging drug owner, which should help the cause of regulation that might impact all drug companies.
Asia Down, Europe Bounces
The day had gotten off to a bad start in Japan, where the Nikkei lost 1.96, and that extended to Shanghai, where the market lost 2.24%, and in Hong Kong, where it lost 2.32%. The big exception was India’s Sensex, which gained .66%.
Europe was a different story. The English FTSE index rose 1.63%, the German DAX was up .44%, and the French CAC-40 was up .10%. European Central Bank head Mario Draghi opened the door to more quantitative easing, and European bonds rose in price, falling in yield.
Oil Down Again
Oil was down again, with West Texas Intermediate on the November contract falling 3.58%, or $1.66, to settle at $44.60. Brent North Sea oil fell 2.53%, or $1.24 on the November contract, to $47.84. The growing spread may increase calls to allow the U.S. to export raw crude, something it hasn’t done since the 1970s, but it will do very little to encourage drilling.
All this was terrible news for Transocean (NYSE:RIG), the largest drilling rig company in the U.S. The stock started near $14.50, but quickly fell 50 cents, rallied as 11 AM approached, then plunged some more, falling fairly steadily to finish at $13.66, down 86 cents or 5.73%.
Back when its Deepwater Horizon rig exploded in the Gulf of Mexico in April, 2010, this was a $90 stock. It took out $80 again in 2011 but has been falling steadily since, despite paying out a total of $5.81/share in dividends. In May the dividend rate was cut to 15 cents to hoard cash, and since then the shares have fallen 30%. Cost-cutting let it eke out a profit in the second quarter, but revenue has continued to fall.
A Mixed Day for Tech, a Down One for Entertainment
Big tech stocks mainly mirrored the market, making small moves. Apple (NASDAQ:AAPL) was actually up, rising 92 cents or .81% to $114.32, although it fell in after-hours trading. The story for Amazon (NASDAQ:AMZN) was the reverse, with shares falling $2.33, or .43%, to $536.07, before erasing all those losses in after-hours trading. Microsoft (NASDAQ:MSFT) probably had it right, going almost nowhere and finishing down 3 cents, .07%, to $43.87.
Entertainment was mainly down for the day. Netflix (NASDAQ:NFLX) lost 40 cents, or .41%, to finish at $98.07. Walt Disney (NYSE:DIS) lost 92 cents. .90%, to finish at $101.57. Comcast -A (NASDAQ:CMCSA) lost 34 cents, or .59%, to finish at $57.37.
So What Happens Now
The fundamentals are not great anywhere. The world is waiting for someone to open up the buying spigot, not with monetary policy but with fiscal policy. That could be corporate or government policy, there is no difference.
Chinese Premier Xi Jinping was meeting with tech executives in Seattle yesterday as Pope Francis urged more spending on refugees and climate change in Washington with President Obama. Maybe one of them can get results.
For a quick roundup of key news and events before the bell, check the daily news section - Markets This Morning.