Despite solid earnings reports after the bell last night from IBM and Apple, equity markets struggled in Wednesday trading thanks to weakness from American Express and Goldman Sachs today. However, boosted by IBM, the Dow finished the day lower by just 0.1%, far outpacing the S&P 500 which lost 1%, and the Nasdaq which tumbled by 1.5% in the session. Commodity markets were again mixed as gold held onto a slight gain while oil fell with the market, sinking by fifty cents a barrel. Markets were far kinder to the soft commodities which again outperformed thanks to strength from the cocoa and cotton markets, although coffee and sugar underperformed. Much of this commodity boost could be attributed to further weakness in the dollar as the U.S. dollar index slid by another 0.5% pushing the index down below $78.6 in Wednesday trading.
Today’s top stories in the world of finance included a slew of earnings reports which weighed on the various sectors of the market. Arguably, the biggest report came from IBM which reported a robust quarter in which the tech giant beat earnings estimates by roughly ten cents a share and revenues by close to $1.2 billion. IBM cited the growing importance of cloud computing as one of the key reasons for its success in the past quarter, a trend which has helped to push many businesses towards its network of data centers and other IT systems, helping to boost the company’s stock by 3% on the day and save the DJIA from a rough decline like its more broadly-focused counterparts. Additionally, after the bell last night, Apple Inc. unsurprisingly crushed analyst estimates for their most recent quarter by close to a dollar a share, however, prices for the tech giant’s stock failed to increase and by the end of trading today AAPL was trading in the red for the session, helping to drag down the rest of the consumer tech sector as well. However, these relatively upbeat reports were canceled out by weakness in the banking sector as poor news from AmEx and Goldman Sachs sent financials sharply lower. Goldman declined by 4.7% after the investment company reported a 53% plunge in earnings thanks to lower revenues from its investment banking and trading segments. Meanwhile, American Express news also weighed on the sector as the company announced it would cut 550 jobs in a move that looks likely to reduce the company’s fourth quarter results. Both of these stories helped to bring down both the broad consumer finance segment of the sector and the retail slice of the market as well.
One of the biggest gainers in the ETFdb 60 was the United States Natural Gas Fund (UNG) which surged by 3.5% on the day. Today’s gains in the ever-volatile natural gas market came as traders bought up futures contracts in the important heating fuel on news that colder-than-normal temperatures would likely be spreading across the eastern half of the country for much of the end of January. Traders also bought up contracts in anticipation of tomorrow’s crucial EIA storage report which many believe will show a drawdown in supplies. Despite a huge oversupply, UNG has managed to surge higher in the past month thanks to cold weather across much of the country. The popular ETN is now up 10.9% over the past four weeks and a huge drawdown in natural gas supplies tomorrow would go along way in terms of pushing that figure even higher [see fundamentals of UNG here].
One of the biggest losers on the day was the Market Vectors Agribusiness ETF (MOO) which plunged by 3.0% in Wednesday trading. A great deal of this plunge can be attributed to weakness in the Mosaic company’s stock price which tumbled by 10.5% in the session on news that the company’s top stakeholder, Cargill, was planning to sell its shares in the firm. In total, Cargill plans to get rid of 286 million shares in the company, or close to $24 billion of the company’s stock, a figure that represents well more than 60% of the total outstanding shares. Although the deal is seems likely to allow Cargill to stay private and give greater flexibility for Mosaic, most investors did not see it that way, pushing shares of the firm down significantly for the day. Furthermore, some believe that this transaction could suggest a near-term top in the recent agribusiness bull market run, a factor which may have led to a broad sell off in the industry and a rough day for shareholders in MOO [see holdings of MOO here].
Disclosure: No positions at time of writing.