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Fed Minutes Spark a Selloff — Wednesday’s IP Market Recap

However, energy and bank stocks buck the losing trends


InvestorPlace Market RecapInvestors muddled through the better part of a day’s lackluster trading waiting for word from the Federal Reserve regarding its outlook for future monetary policy — and when the news hit, so did the markets.

The central bank is wary that its efforts to boost the economy through a continuation of Operation Twist, or additional easing through a QE3 efforts, comes with an uncertainty in the risk of actually doing too much. Indeed, members noted that they don’t completely understand the risks of taking easing efforts too far, limiting future actions.

Calls for more easing continue to reverberate throughout Wall Street, despite the Fed buying up Treasury securities since 2008 in an effort to push interest rates low enough to stimulate the economy on its own.

The Dow plunged 100 points just moments after the minutes were released before recovering a bit, ending down 0.38% to 12,604. The Nasdaq was off about half a percent to 2,888, and the S&P 500 was virtually flat at 1,341.

Not all was negative, though. The energy sector reacted strongly to a jump in crude oil — NYMEX crude for August delivery gained more than 1% to $85.06. Exxon Mobil (NYSE:XOM), ConocoPhillips (NYSE:COP) and Marathon Oil (NYSE:MRO) all gained more than 1% on the day, while Chevron (NYSE:CVX) posted a mild gain.

Bank stocks also managed to edge higher on the day after JPMorgan Chase (NYSE:JPM) announced a plan to “claw back” monies from bank executives in the wake of its hedging losses in June. JPM also announced the loss is closer to $5 billion against an initial estimate of $2 billion. Investors bumped JPM and Wells Fargo (NYSE:WFC) up just more than 1% on the day. Bank of America (NYSE:BAC) rose just more than 2%, and also announced it was continuing its nominal dividend of 1 cent per share, payable Sept. 28, 2012.

UBS‘ (NYSE:UBS) began coverage of Apple (NASDAQ:AAPL) with a price target of $740, but AAPL still slipped to a marginal loss, as did the majority of large-cap technology stocks including Microsoft (NASDAQ:MSFT) and Intel (NYSE:INTC).

Hewlett-Packard (NYSE:HPQ) rose 3% on news of new contracts with Russian Railways, the State of Delaware and the Cleveland Public Library system.

On the earnings front — where forward-looking news has been hideous — Thursday brings news from Google (NASDAQ:GOOG) after the bell, while Friday’s reporting companies include JPMorgan and Wells Fargo.

Three Up

  • Booz Allen Hamilton (NYSE:BAH): Up 13.4% ($1.38) to $16.74.
  • MAKO Surgical (NASDAQ:MAKO): Up 4.1% (57 cents) to $14.58.
  • Abercrombie & Fitch (NYSE:ANF): Up 4.1% ($1.35) to $34.12.

Three Down

  • Ciena (NASDAQ:CIEN): Down 7.9% ($1.21) to $14.15.
  • Groupon (NASDAQ:GRPN): Down 6.5% (54 cents) to $7.77.
  • Harley-Davidson (NASDAQ:HOG) Down 4.8% ($2.27) to $44.82.

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he is long MSFT, INTC, XOM and AAPL.

Article printed from InvestorPlace Media, http://investorplace.com/2012/07/fed-minutes-spark-a-sell-off-wednesdays-ip-market-recap-xom-cop-mro-cvx-jpm/.

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