U.S. markets were caught off guard this morning by China’s nearly 2% devaluation of the Yuan, and the result was a hefty decline in the major indices. In addition, oil prices and commodity prices all tumbled. Crude oil was down more than 4% intraday, and finished up at a six-year low of $43.38 a barrel.
China’s move came in an effort to help their own exports, which fell more than 8% in July, but there was some disagreement among those on Wall Street as to whether or not the devaluation would really help them that much.
In other economic news, wholesale revenues rose just 10 basis points in June — the worst reading since March — but inventories gained 0.9%, which was 30 basis points above expectations. This could portend an increase in the gross domestic product going forward.
The Dow Jones Industrial Average was off 1.2%, while the S&P 500 Index was 0.9% lower. It was the Nasdaq Composite, however, that was the weakest of all at nearly 1.3% in the red. With the exception of utilities, every sector was showing red today. Basic materials stocks were obliterated on the day.
The Chinese devaluation was seen as potentially hurting some big name stocks, like Apple Inc. (NASDAQ:AAPL), which was down more than 5% on the day.
Despite the big down day for the averages, some stocks managed to outperform. Today it was Google Inc (NASDAQ:GOOGL, GOOG), American Airlines Group Inc (NASDAQ:AAL) and Terex Corporation (NYSE:TEX) who led the way, which is why they are three of today’s best stocks
Google Inc (GOOGL)
China’s currency devaluation wasn’t the only surprise to hit Wall Street this morning. Google announced the creation of a new organizational structure: an umbrella company dubbed Alphabet Inc.
Co-founder and CEO Larry Page will head up the new organization, and Sundar Pichai, who was heading Android and Chrome, will take over as Google’s CEO.
GOOGL stock was up 4% on the news.
American Airlines Group Inc (AAL)
AAL stock got a lift today, rising over 2% after reporting 21.8 billion in total revenue passenger miles for July — up almost 5% from a year ago, setting a record for RPM at American Airlines.
American also set a record for total capacity with 24.9 billion available seat miles, which was up 2.2% from a year ago. Total passenger load factor also saw a 2.2% bump over the past year, and now sits snugly at 87.3%.
Airlines found strength in the decline in worldwide oil prices from $56 to $38, sending AAL stock bouncing back to finish the day at $42.70.
Terex Corporation (TEX)
Terex, a U.S. crane and heavy equipment manufacturer, saw its stock bolt 22% higher after agreeing to an all-share merger with Finland’s Konecranes PLC (OTC:KNCRF), a company that also manufactures and services cranes and heavy lifting equipment.
Terex’ customers are in the mining, construction and shipping industries, while Konecranes provides cranes for factories, shipyards and terminals.
Both companies see the merger as a way to achieve cost savings and complement each other.
Shareholders of Terex stock will get 0.8 Konecranes shares for each Terex share owned. The deal should close early next year and deliver annual net income of $119 million within three years.
As of this writing, Ethan Roberts does not hold a position in any of the aforementioned securities.
