DJIA today, July 12, 2014: U.S. stocks were in the red on Tuesday as concerns about the European markets affected investor sentiment. Geopolitical hot spots in Ukraine and in the Middle East have led to an increased emphasis on reducing exposure to risk.
In New York and London, oil prices slipped on supply and demand concerns. First, the International Energy Agency slashed its 2014 global oil demand forecast. Meanwhile, the U.S. Energy Information Administration announced that U.S. producers had struck a near 30-year production high in July.
In positive news for the U.S. government, the U.S. Department of the Treasury said that the nation's budget deficit is 24% narrower this year than it was a year ago as a stronger economy helps revenue advance almost seven times faster than spending. Despite the high-fives around Capitol Hill, the United States is still more than $17 trillion in debt.
Here's the scorecard from today's trading session:
Europe in Peril: First it was Italy that was coming to grips with a sharp economic downturn. Now, Europe's largest economy, Germany, is struggling to keep afloat in the wake of rising geopolitical exposure to problems in Russia and Ukraine. In August, the ZEW Indicator of Economic Sentiment crashed 18.5 points to 8.6, making this the lowest reading since December 2012. This is now the eighth-consecutive decline for the indicator.
Fashion Disaster: Shares of retail goods manufacturer Kate Spade & Co. (NYSE: KATE) underwent wild swings of volatility today after the company announced it had beaten second-quarter earnings expectations. The stock initially struck a 52-week intraday high after rising more than 10%. However, KATE stock quickly plummeted more than 23% during the day after company executives said that promotions are hampering company profit margins, reducing expectations that the company can maintain its record growth without offering discounts.
Pharma Profits: This afternoon provided some big winners in the pharmaceutical sector. Shares of Exact Sciences Corp. (Nasdaq: EXAS) were up as much as 6% on news that the U.S. Food and Drug Administration approved its noninvasive, colorectal cancer screening test. Meanwhile, shares of Intercept Pharmaceuticals Inc. (Nasdaq: ICPT) were up more than 23% on news that the company's drug to treat liver disease performed well in mid-stage trials.
Merger Mania: Shares of Newmont Mining Corp. (NYSE: NEM) and Barrick Gold Corp. (NYSE: ABX) were both up more than 2% on the day following rumors that the proposed merger between the firms in April could be alive again. Back in April, there was rampant speculation that Newmont would purchase Barrick Gold. The deal was shelved by Newmont at the end of the month, but the company's CEO said the company is now open to exploring the idea again.
Russian Problems: The world's largest oil field services provider Schlumberger Ltd. (NYSE: SLB) announced that its quarterly profits will be affected by the ongoing geopolitical standoff between Russia and the West. The company said that sanctions against Russia are hampering business in the region. This is the second major announcement by a global oil and gas firm warning on the impact of these sanctions. In July, BP Plc. (NYSE ADR: BP) said it was highly exposed to the sanctions, particularly its 20% stake in Russian oil behemoth Rosneft. Shares of Schlumberger were down more than 1.2% on the day.
Circuit Breaking: Shares of Mannkind Corp. (Nasdaq: MNKD) slumped more than 13%, erasing most of the gains the stock earned in yesterday's trading session. During the day, the heavy volume triggered the Nasdaq Exchange's short-sale circuit breaker. The sell-off comes just one day after Sanofi SA (NYSE ADR: SNY) announced it had purchased the rights for the development and marketing of MannKind's Afrezza inhalation medication. The deal is worth up to $925 million should the drug meet marketing and sales goals.
Now our experts share some of the most important investment moves to make based on today's market trading - for Money Morning Members only:
Profit from the World's Largest E-Commerce Market: Mainland China has leapfrogged the United States to become the biggest e-commerce market on Earth. We wanted you to hear about some of the best new opportunities. So you can reap the biggest payoffs...
This Northern Metals Boom Will Give Us More Than 10 Times the Returns of the S&P 500: In the last three years, junior miners have, as a group, lost about 58%, while the S&P 500 is up 52%. But it's looking increasingly like we're entering a brand new boom phase, with junior gold miners up as much as 45.8% this year - with a lot more in store... Here are two to consider...
Put These Investing Classics on Your Vacation Reading Short List: As we move through August - we're hitting prime vacation season. If you're like our Executive Editor Bill Patalon, you want to use that time to catch up on your reading. Consider including a business book or two on that list. The time invested will have a long-term payoff. Here's a list of Bill's favorite investment books today...
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.