Market Recap: Stocks Drop On Recession Fears
GDP came in lower than expected increasing recession concerns.
Sentiment was poor with today's economic data and Bernanke laying out economic troubles on Capitol Hill. The Commerce Department reported this morning Gross Domestic Product rose at an annual rate of 0.6% from October through December, lower than the 0.8% rate economists were expecting. Consumption was also lower, increasing at a rate of 1.9% vs. expectations of 2.0%. Further, with news of another rogue trader at MF Global (MF) losing $140 mln and employees of Wachovia (WB) being investigated by the Department of Justice for bid-rigging, the pressure was too much for the financial sector. Toddo noted the signs in today's session. "I don't like the way the banks are trading," he said. "Watch Grandma Goldman (GS). She's fallen and it doesn't look like she's getting up." MF shares hit a new 52-week low tumbling -27% to $21.19. WB fell -5.10% to $32.36. Other notables included JPMorgan Chase (JPM) closing -4.4% to $42.44, Merrill Lynch (MER) dropping -4.7% to $51.66, and Goldman Sachs (GS) down -2.27% to $176.70. Read Toddo's Random Thoughts for insight into today's tape.
Homebuilders failed to catch a bid as well, a day after Toll Brothers (TOL), the largest luxury homebuilder in the U.S, reported a quarterly loss of $96 mln -- its largest in over two decades. Revenues fell 22% with the CEO blaming the mood of consumers in general. "Yes that is true," wrote Professor Kevin Depew, "Because that is what happens in every recession." TOL fell -5.6% to $22.49, but losses were led by D.R. Horton (DHI) falling -9.2% to $15.52 followed by Standard Pacific (SPF) closing -9.11% to $4.59 and Hovnanian (HOV) -8.2% to $9.94. The broader Philadelphia Housing Index (HGX) dropped -4% to $141.82. For more, read Professor Depew's Five Things You Need To Know.
Tech shares were mixed. Apple (AAPL) continued its move higher after positive comments from its CEO Steve Jobs. "What do they know and when did they know it?" asked Professor Jeff Cooper. "The way Apple gained green from the get-go after gapping down yesterday (Goldman after the bell conference)… You want to know why tech analysis works? The Street can't keep a secret. The loop looms large… I never met big money that bought a stock because they didn't' think they knew something the next guy didn't'." AAPL shares closed +5.3% to $129.55. Google (GOOG) also gained on the day closing +0.31% to $474.00. Trading to the downside were Research In Motion (RIMM) settling -2.34% to $108.70 , Baidu (BIDU) -2.8% to $251.50, and Applied Materials (AMAT) -2.1% to $19.68. The broader tech ETF (XLK) closed -1.27% to $22.61.
Commodities finished strong. Crude finished +2.47 to 102.10. Gold added +10.60 to 971.60. Silver added +0.505 to 19.710 and Copper added +2.70 to 386.50.
In regards to gold's recent out-performance, Professor Lewis noted on the Buzz, "When gold stocks start trading at huge premiums to Net Asset Value based on the current gold price (same principle as with XAU/gold ratio)… that's when I'll be looking for a potential top in gold stocks…. But we're very far from that scenario at the moment. The XAU/gold ratio is still 0.207 and dragging around near the lows of its 25-year range."
Notable advancers in gold included Barrick Gold (ABX) finishing -3.6% to $53.33, GoldCorp (GG) which reached a new 52-week high, adding +3% to $44.71, and Newmont Mining (NEM) settling +2.8% to $52.84. For more, read his article today Gold's Not Done yet.
The dollar index fell -0.508 to 73.705.
For more summaries, click on Minyanville's Buzz Bits.
Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.
Some bullish trade or investment ideas: AAPL, AMAT, ADBE, CTSH, ISRG, AMZN, SHLD, SPX, GLD, HNZ, DLM, MSFT, gold
Some bearish trade or investment ideas: FNM, GS, SPX, AAPL
Thank gawd for Friday! Good night, Minyans!
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