Gold and Silver Shine, But Stocks Stall

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Stocks bounced around the unchanged line on Thursday in a relatively quiet session. But beneath the surface, an exciting rebound in precious metals and the related mining stocks suggests Wall Street could possibly be beginning to price in a surge of higher inflation, a weaker dollar or a more dovish Federal Reserve — or a combination of all three.

In the end, the Dow Jones Industrial Average lost a fraction, the S&P 500 lost a fraction, the Nasdaq Composite lost a fraction, and the Russell 2000 lost 0.4%. Gold headed 1.2% higher while the dollar ticked lower.

Payments app maker Square (NYSE:SQ) gained 45% after going public today, following a pricing below expectations at $9 per share. The initial pricing gave the company a nearly $3 billion valuation — about half of its most recent private-sector funding valuation. The chatter was the investors were nervous about CEO Jack Dorsey’s time split between SQ and Twitter Inc (NYSE:TWTR), but the day’s trading suggests that was unfounded.

Keurig Green Mountain Inc (NASDAQ:GMCR) gained 15.2% on a fiscal Q4 earnings beat and better-than-expected revenues thanks to a 2% increase in the price of its coffee pods. Gold Fields Limited (ADR) (NYSE:GFI) surged 18% after reporting in-line earnings and a 7% revenue beat. Lululemon Athletica Inc. (NASDAQ:LULU) gained 3.6% on takeover speculation, with Under Armour Inc (NYSE:UA) cited as a possible suitor. Nike Inc (NYSE:NKE) gained 3.5% in after-hours trading after announcing a $12 billion stock buyback program, a 14% dividend increase, and a 2-for-1 stock split.

Stage Stores Inc (NYSE:SSI) dropped nearly 31% after reporting a wider-than-expected Q3 loss on a 3.5% drop in sales. UnitedHealth Group Inc (NYSE:UNH) dropped 5.7% and guided 2015 earnings per share down 5% vs. prior guidance on profit issues under Obamacare, which the company is now considering a departure from. Best Buy Co Inc (NYSE:BBY) lost 2.1% despite a Q3 earnings beat as investors were disappointed by domestic comp-store sales growth of 0.8% (below the 1.2% expected).

On the economic front, the Philly Fed index improved to +1.9 from -4.5 in October — the first positive reading in three months. Still, new orders and shipments remain weak while employment returned to growth.

Technically, stocks remain in stasis with the Dow perched near its 20-day moving average, breadth narrowing and stocks ignoring the weakness of commodities and high-yield corporate bonds.

There is some excitement in gold and silver, however, as the dollar hits resistance from the highs set in March and April.

U.S. Dollar

As investors digest Wednesday’s Federal Reserve meeting minutes, the takeaway was slightly dovish — suggesting that even if we see rate liftoff in December, the Fed may need to lower its projected path of interest rate hikes into 2016 to more closely align with market expectations given low inflation.

In response, I recommended a group of gold and silver stocks to Edge subscribers today, including First Majestic Silver Corp (NYSE:AG), which is up 2.2% for readers already as shares bounce nicely out of a five-month support range.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/11/gold-and-silver-shine-but-stocks-stall/.

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