Stocks Go Bananas As Taper Kicked Down The Road

Michael Teague  |

Stocks went on a mad rampage on Wednesday after the Federal Reserve shocked investors with the announcement that its Quantitative Easing program would remain in its current $85 billion-monthly configuration, pending more convincing evidence of improving economic conditions in the US.

Indices surpassed record-highs. The per-barrel price of West Texas Intermediate crude jumped nearly 4 percent to over $108, while gold added nearly 3 percent to $1,356.70 per ounce, and the yield on the 10-year Treasury note plummeted over 5 percent.

The day’s main economic data point, housing starts figures, indicated a 0.9 percent advance in August on a month-over-month basis, well short of the expected 2.3 percent gain to 917,000. July’s figure was downwardly revised to an increase of 5.7 percent, while the number of building permits issued dropped much more than had been expected, down 3.8 percent against expectations of a much less severe decline of 0.4 percent.

The Standard & Poor’s 500 gained1.22 percent to 1,725.52, while the Dow Jones Industrial Average hit a new all-time high at 15,676.94 points, an advance of 0.95 percent. The NASDAQ added1.01 percent to end the day at a grand total of 3,783.64 points.

On the S&P 500, basic materials stocks, as well as residential construction companies enjoyed a banner day, with gains of at least 6 percent for each of DR Horton (DHI) , Lennar Corp. (LEN) , and PulteGroup ($PHM). Mining companies were among the best performers for materials, with Newmont Mining (NEM) up nearly 8 percent on the jump in gold prices, and Cliffs Natural Resources (CLF) adding some 5 percent.

The NASDAQ saw tech shares significantly higher. Along with the indefinite postponement of the dreaded taper, Apple Inc. (AAPL) rallied to a gain of over 2 percent ahead of the close, fueled by a very favorable reception of its new iOS 7 operating system. A number of companies were caught in the updraft, including Microsoft (MSFT) , Micron Technology (MU) , and Himax Technologies (HIMX) . Adobe Systems (ADBE) added nearly 10 percent after releasing a third-quarter earnings report that missed expectations, but pleased investors with the news that the number of Creative Cloud users exceeded 1 million during the period.

The Dow saw all but one component end the day higher, as Unitedhealth Group (UNH) shed some 2 percent. Alcoa Inc. ($AA) was the best performing stock on the benchmark index, adding nearly 4 percent by the closing bell.

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Companies

Symbol Name Price Change % Volume
UNH UnitedHealth Group Incorporated (DE) 260.91 0.55 0.21 1,635,347 Trade
HIMX Himax Technologies Inc. 6.59 0.03 0.46 2,010,994 Trade
AA Alcoa Corporation 44.45 -0.53 -1.18 4,337,588 Trade
AAPL Apple Inc. 208.87 1.34 0.65 25,890,880 Trade
ADBE Adobe Systems Incorporated 253.54 -0.16 -0.06 1,535,494 Trade
DHI D.R. Horton Inc. 43.52 -1.40 -3.12 3,764,616 Trade
LEN Lennar Corporation Class A 50.78 -2.60 -4.87 4,111,626 Trade
PHM PulteGroup Inc. 27.65 -1.09 -3.79 6,524,743 Trade
CLF Cleveland-Cliffs Inc. 10.20 -0.12 -1.16 7,260,896 Trade
MU Micron Technology Inc. 51.34 -0.03 -0.06 24,609,540 Trade
NEM Newmont Mining Corporation 34.65 -0.95 -2.67 5,416,922 Trade
MSFT Microsoft Corporation 108.21 -0.79 -0.72 18,474,884 Trade
PHSVY Philippine Seven Corp Adr n/a n/a n/a 0

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