Despite a slow start, stocks finished the day on a very high note. Encouraged by a surprisingly strong consumer confidence reading for March, the S&P 500 advanced 0.73% to close at 2,358.57.
Here’s the deal.
Banco Santander Brasil SA (ADR) (BSBR)
In a superficial sense, it shouldn’t matter. In the real world though, investors read a lot of things into a decision from a major institution to sell a big piece of its stake in a publicly traded company.
On Tuesday, the Qatar Fund — a state-owned investment fund — announced it would be selling roughly 40% of its stake in Brazilian bank Banco Santander Brasil. The fund already owns 5.5% of the outstanding shares of BSBR, translating into a sale of approximately $900 million worth of BSBR stock.
It’s not an open-market sell, which could do even more serious damage to the price of BSBR than the 9% hit the stock took today in the wake of the unexpected news. Rather, the fund is shopping their stake around to other major investors via an underwriter, offering units consisting of one common share and one preferred share together.
Snap Inc (SNAP)
After several appearances on the daily ‘Worst 3’ list following its initial post-IPO bullish jolt, the Snap sellers that had been beating the stock down since early March have given faithful owners something of a reprieve last week. That break appears to be over, though, with today’s 6.8% setback rekindling fears that SNAP is arguably overvalued.
The weakness unfurled just a day after Snap — the parent company of popular online messaging app Snapchat — was on the receiving end of several upgrades that drove the stock up 4.9% on Monday.
Blame Facebook Inc (NASDAQ:FB). The social networking giant announced today it was revamping its own messenger service to offer camera effects and ‘Stories’ along with a couple of other new features. All are tools Snapchat already provides, giving current and would-be Snapchat users another reason to stick with Facebook and forego Snapchat’s platform.
Goldcorp Inc. (USA) (GG)
Last but not least, although Goldcorp was one of the day’s biggest losers, it was merely the poster child for gold mining stocks today, losing 6.9% of its value on Tuesday after gold’s 0.40% for the session. The Market Vectors Gold Miners ETF (NYSEARCA:GDX), which is a fair representation of the entire industry, was down 2.6% today.
While the punishment doesn’t quite fit the crime (a 2.6% drop from gold mining stocks doesn’t quite jibe with a modest lull from gold itself), the recent runup in gold prices is prompting profit-taking in the stocks that rode the bullish wave. As Piper Jaffray technical analyst Craig Johnson explained today, “We’re running into big overhead resistance here at $1,260 … I would be selling into the strength on gold.”
Fanning the bearish flames that burned gold and its related stocks today was the migration out of them and back into other kinds of equities, as traders attempted to get back into what appears to be a rekindled rally.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.