Stocks finished Tuesday mixed, but well off the lows, after all of the major indexes dropped sharply early in the day on Tuesday following overnight declines in Asian and European markets.
First, the scoreboard:
- Dow: 17,806.7, -45, (-0.3%)
- S&P 500: 2,060, -0.1, (0%)
- Nasdaq: 4,766.9, +26, (+0.5%)
And now, the top stories on Tuesday:
1. Stocks had an ugly morning. Overnight, the Shanghai Composite fell more than 5%, a sharp pullback after what’s been a furious rally for Chinese stocks. The Shanghai Composite is still up by almost 40% in January. There was no apparent news connected with the move in Chinese stocks, but after going so far, so fast, some volatility is to be expected. But as Business Insider’s Mike Bird reported: “Such rapid slumps will most likely be raising a few eyebrows.”
2. Stocks in Greece lost more than 12% on Tuesday, the biggest one-day drop for Greek stocks since 1987. This crash followed news that the country unexpectedly pulled forward its presidential elections by two months to December 17. The main problem this poses for Greece is that its presidential election is conducted by its legislature, not its population, and so the government needs a super-majority to install a president. If this does not happen, then a general election would be called, with public polls currently lead by the anti-austerity group Syriza.
3. As equity markets sold off early in the day, “safe haven” assets like US Treasury bonds and gold were in rally mode. The yield on the 10-year Treasury note fell below 2.2%, while the 30-year yield fell to as low as 2.86%, the lowest level since 2012. Gold spiked as high as $US1,240 an ounce.
4. The big stock news on Tuesday was that Abercrombie CEO Mike Jefferies would be stepping down from his post leading the teen retailer. Jefferies is leaving after more than two decades at the company. Abercrombie shares gained 8% on Tuesday.
5. Citi CEO Michael Corbat said that the bank would take a $US3.5 billion charge in the fourth quarter related to investigations and restructuring. Corbat said, however, that the bank still expects to be “marginally profitable” in the fourth quarter.
6. In economic data, the latest NFIB report on small business showed that 45% of the survey’s respondents reported “few or no qualified applications” for positions they sought to fill. This number, coupled with an increase in the number of firms that reported an increase in actual worker compensation in November, suggest that higher wages could be coming for America’s workers.
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