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

by Marc Bastow | July 11, 2012 5:09 pm

IPMarketRecap Fed Minutes Spark a Selloff    Wednesday's IP Market Recap[1]Investors 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[2]), ConocoPhillips (NYSE:COP[3]) and Marathon Oil (NYSE:MRO[4]) all gained more than 1% on the day, while Chevron (NYSE:CVX[5]) posted a mild gain.

Bank stocks also managed to edge higher on the day after JPMorgan Chase (NYSE:JPM[6]) announced a plan to “claw back” monies[7] 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[8]) up just more than 1% on the day. Bank of America (NYSE:BAC[9]) 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[10]) began coverage of Apple (NASDAQ:AAPL[11]) with a price target of $740[12], but AAPL still slipped to a marginal loss, as did the majority of large-cap technology stocks including Microsoft (NASDAQ:MSFT[13]) and Intel (NYSE:INTC[14]).

Hewlett-Packard (NYSE:HPQ[15]) 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[16] — Thursday brings news from Google (NASDAQ:GOOG[17]) after the bell, while Friday’s reporting companies include JPMorgan and Wells Fargo.

Three Up

Three Down

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

Endnotes:
  1. [Image]: http://investorplace.com/hot-topics/investorplace-market-recap/
  2. XOM: http://studio-5.financialcontent.com/investplace/quote?Symbol=XOM
  3. COP: http://studio-5.financialcontent.com/investplace/quote?Symbol=COP
  4. MRO: http://studio-5.financialcontent.com/investplace/quote?Symbol=MRO
  5. CVX: http://studio-5.financialcontent.com/investplace/quote?Symbol=CVX
  6. JPM: http://studio-5.financialcontent.com/investplace/quote?Symbol=JPM
  7. a plan to “claw back” monies: http://investorplace.com/2012/07/jpmorgan-chase-preparing-clawback-announcement/
  8. WFC: http://studio-5.financialcontent.com/investplace/quote?Symbol=WFC
  9. BAC: http://studio-5.financialcontent.com/investplace/quote?Symbol=BAC
  10. UBS: http://studio-5.financialcontent.com/investplace/quote?Symbol=UBS
  11. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  12. with a price target of $740: http://investorplace.com/2012/07/the-apple-aapl-price-target-circus-continues/
  13. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  14. INTC: http://studio-5.financialcontent.com/investplace/quote?Symbol=INTC
  15. HPQ: http://studio-5.financialcontent.com/investplace/quote?Symbol=HPQ
  16. forward-looking news has been hideous: http://investorplace.com/2012/07/wall-street-earning-warnings-bloodbath/
  17. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  18. BAH: http://studio-5.financialcontent.com/investplace/quote?Symbol=BAH
  19. MAKO: http://studio-5.financialcontent.com/investplace/quote?Symbol=MAKO
  20. ANF: http://studio-5.financialcontent.com/investplace/quote?Symbol=ANF
  21. CIEN: http://studio-5.financialcontent.com/investplace/quote?Symbol=CIEN
  22. GRPN: http://studio-5.financialcontent.com/investplace/quote?Symbol=GRPN
  23. HOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=HOG

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