Equity markets slumped to start the Holiday-shortened week as poor news out of Apple and Citi before the bell hit markets hard. However, a rally took place soon after as investors bought up beaten down securities which helped to push markets to gains on the day. The Dow finished ahead by 50 points while the S&P 500 rose by 0.1% and the tech heavy Nasdaq managed to gain 0.4%. Commodity markets were relatively subdued as gold gained five dollars an ounce and oil lost marginally, just under 30 cents for the session. The main leader in the commodity space was the grain market where corn, wheat, and rice all gained significantly on the day thanks to a slightly weaker dollar which fell as fears over a European debt contagion continued to subside.
The biggest stories for today’s session arguably came out of the technology and banking sectors where key news releases regarding Apple and Citigroup weighed on market sentiment. Shares of the tech giant slumped after news hit the wires that the company’s storied CEO, Steve Jobs, would be taking another medical leave of absence. The company looks to put Tim Cook current COO who has stepped in for Jobs before, back in the interm CEO role in order to propel the company forward as their battle increased competition in a variety of markets. Despite the solid job that Cook did in his last stint as CEO, markets cooled on shares of Apple sending prices of the security lower by more than 2% on the day. Meanwhile, investors were also disappointed by a report from Citigroup regarding the company’s most recent quarter. The banking giant reported that its quarterly profit missed analyst estimates thanks to weakness in the institutional trading business. This report, which missed earnings expectations of eight cents a share by four cents, sent shares plunging by almost 7% in Tuesday trading, news that helped to drag down the rest of the banking sector as well.
One of the biggest gainers on the day was the Market Vectors Gold Miners ETF (GDX) which soared by 1.7% in Tuesday’s session. Today’s gains came despite a less than impressive increase in the price of gold and were largely due to a robust report from a unit of the fund’s top holding, Barrick Gold. The company’s African subsidiary, African Barrick Gold, said that fourth-quarter output rose from the preceding quarter which pushed its gold production to a 9% gain when analyzed on a quarter-over-quarter basis. This news helped to push Barrick Gold higher by 2.3% and boosted the industry at large which was suffering from low sentiment given the recent slide in precious metal prices [see holdings of GDX here].
One of the biggest losers in the ETFdb 60 was the United States Natural Gas Fund (UNG) which sank by 1.6% in Tuesday trading.� Despite a cold weather forecast across much of the country, natural gas prices slipped thanks to robust supplies which many believe are likely to continue well into the future. Stockpiles of the important heating fuel remain roughly 5.8% above the five year average while the number of rigs drilling for gas is 11% higher than it was just a year ago. “Because we remain worried that rig counts will stay too high, our projections for the next two storage seasons remain bearish,” Macquarie analysts wrote in a client note. “Nor do we think that more severe weather this winter can salvage much of near term price weakness.” Thanks to this bearish outlook, UNG looks to remain under pressure unless a major supply distribution or extreme weather takes place in the near future [see more charts of UNG here].
Disclosure: No positions at time of writing.
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