The Dow Jones fell 251 points today. The cause? An afternoon oil-price surge caught the market off guard. West Texas Intermediate crude jumped 8% in New York.
Stocks in focus this week: Alibaba stock (NYSE: BABA) fell nearly 9% Thursday. Our Technical Trading Specialist D.R. Barton explains why BABA is still a solid long-term play.
Today's Scorecard:
Dow: 17,164.95, -251.90, -1.45%
S&P 500: 1,994.99, -26.26, -1.30%
Nasdaq: 4,635.24, -48.17, -1.03%
The S&P 500 Volatility Index (VIX), the market's fear gauge, spiked more than 16% on the day.
What Moved the Markets Today: The late-day surge in oil prices was the big story Friday. Crude prices jumped in New York after Islamic State militants attacked Kurdish forces near the oil-rich city of Kirkuk and news emerged that the U.S. rig count, an indicator of forward production, slipped by 7% this week.
The fourth-quarter GDP report issued today registered a lower growth rate than economists anticipated. U.S. GDP increased 2.6% in the fourth quarter, down from the expected 3.2% and well below the 5.0% pace recorded in the third quarter.
Now, check out the other top market stories - plus get today's profit tip for investors:
Cooking Up Profits: Shares of Shake Shack Inc.(NYSE: SHAK) surged as much as 150% during its public debut. The New York-based burger chain was expected to open at $21 - a steep increase from the initial price range of $14 to $16 per share. But demand was immense, and the stock surged in its first hour. But is Shake Shack a good investment? Find out here.
Credit Crushes: Shares of MasterCard (NYSE: MA) were up nearly 1% this afternoon on news the payment processor reported stronger than expected quarterly profits and revenue. MasterCard CEO Ajay Banga also provided a rosy outlook for 2015. On Thursday, Visa Inc. (NYSE: V) reported strong fiscal first-quarter earnings of $2.53 a share, beating estimates by $0.04. The firm also announced plans for a four-for-one stock split. Visa shares were up 2.79% on the day.
Cutting Costs: Shares of Chevron Corp. (NYSE: CVX) slipped 1% today despite the firm announcing it beat fourth-quarter earnings estimates. The company said sales of chemicals, lubricants, and other refined products allowed the firm to offset crashing oil prices, which have fallen by more than 60% since last June. Still, the firm plans to slash its capital expenditures in 2015 by 13%, down to $35 billion.
An Apple a Day: Shares of Apple stock hit a new 52-week intraday high Friday, as investors remain bullish on the stock after its quarterly earnings report from this week. Apple Inc. (Nasdaq: AAPL) smashed Wall Street expectations with record sales of iPhones in the holiday shopping season. This fueled the largest quarterly profits in company history. The stock slid in afternoon trading, however, to end the day down 1.46%.
Money MorningTip of the Day: Shorting takes guts and more than a little discipline, but don't be put off...
Today's tip comes from a recent article from Money Morning Chief Investment Strategist Keith Fitz-Gerald:
Most investors focus exclusively on buying stocks in an attempt to capture huge returns. That's too bad, because it means they restrict themselves to half the opportunities available to them.
After all, markets move up AND down, which means there is plenty of profit potential to be had in both directions.
George Soros made $1 billion in a single trade that famously almost broke the Bank of England in 1992. John Paulson made billions from the housing crisis by betting against the grain. Doug Kass of Seabreeze Partners is famous for bucking conventional wisdom on seemingly mighty companies and laughing all the way to the bank.
That's why shorting is one of the first tactics I shared with you in my Total Wealth publication.
Now shorting stocks isn't for everybody - it takes guts, conviction, and a whole lot of discipline to do it profitably. But done right, it can really boost your profits.