Can bad news keep the rally going?

Stocks surge as fears ease that the Fed will boost interest rates sooner rather than later. Interest rates drop. Gold and silver are battered. Apple falls under $400.

By Charley Blaine Jun 26, 2013 6:38PM
Trading floor © Digital Vision Ltd./SuperStockToday's big questions about the markets: Did they rally because things really aren't falling apart? Or did the rally reflect relief that the Federal Reserve doesn't have to rush into raising interest rates?

I am more inclined to go with the second question. The market rallied because interest rates moved lower: The 10-year Treasury yield was 2.539% on Wednesday, down from 2.589% on Tuesday.

Interest rates slipped Wednesday because a new government estimate said the economy didn't grow in the first quarter as many had thought.

Thus the second quarter and maybe the second half of the year will be more of a challenge. Therefore, the thinking went, the Federal Reserve doesn't have to do anything for now. And lo and behold, in an environment where bad news is good news, stocks rallied for a second day in a row.

Also helping stocks were ugly sell-offs in gold (-GC) and silver (-SI). Both fell to three-year lows.

The Dow Jones industrials ($INDU) added 150 points to 14,910. The Standard & Poor's 500 Index ($INX) jumped 15 points to 1,603. The Nasdaq Composite Index ($COMPX) climbed 28 points to 3,376.

If reports on jobless claims and personal income also disappoint on Thursday, rates should fall again, and stocks might rally a third day.

The S&P 500 finished above 1,600 for the first time in a week. The Dow's move was the 14th gain or loss of 100 points or more in just 18 trading sessions in June. The 14 100-point changes represent nearly 36% of the 39 days of 100-point changes this year alone. And there are two more trading days left in June.

The rally was fairly broad, but Apple (AAPL) finished the day down $4.56 to $398.07, its first close under $400 since April 22 and lowest close since April 18. The catalyst was a report, showing its market shares declining in Europe.

The most dramatic story line came with that drubbing suffered by precious metals. Gold settled down $44.80, or 3.5%, to $1,230.30 an ounce in New York. Silver dropped 93.9 cents, or 4.8% to $18.59 an ounce. The metal has basically fallen back to levels last seen in August 2010. Platinum (-PL) fell $46.80 to $1,303.70 an ounce.

Gold is down 11.3% in its last three days of trading and is down 26.6% this year. Silver has fallen 15.3% this week and is down an astonishing 38.5% in 2013.

Wednesday's slump battered mining stocks: Newmont Mining (NEM) was down $1.71 to $27.22. It has slumped nearly a third this week and is down 51% this year. Coeur Mining (CDE), which used to be Coeur d'Alene Mines, fell 66 cents to $11.49.

Gold and silver have been falling on evidence there's little inflation in the developed world, forcing many institutional investors to unload their precious metals holdings. Moreover, economies like China and Brazil aren't growing at the breakneck paces they experienced a year or so ago.

So, if metals weren't the place to be, what was? Health care, utilities, consumer discretionary stocks like housing and staples. Boeing (BA), Home Depot (HD) and Microsoft (MSFT) were the Dow leaders. (Microsoft owns and publishes Top Stocks, an MSN Money site.) Alcoa (AA), Caterpillar (CAT) and IBM (IBM) were the only losers.

A total of 409 S&P 500 stocks were higher, led by Harman International (HAR), Alexion Pharmaceuticals (ALXN) and Biogen Idec (BIIB). Apollo Group (APOL), Newmont Mining and coal-producer Peabody Energy (BTU) were the laggards.

And 83 Nasdaq-100 stocks were winners, led by Alexion and Biogen Idec. Gold producer Randgold Resources (GOLD) and chip-equipment maker Applied Materials (AMAT) were the laggards.

More on Top Stocks
Jun 26, 2013 7:14PM
I wish that the interest in savings instrument would rise a bit so one could earn a few bucks, but the banks are getting all the money and the heck with the other folks, Thank You very much, Mr. Bernanke, a stoolie for the banks and Wall Street.
Jun 26, 2013 11:14PM

Once again, just another example that the main factor driving this market is the Fed.  When the markets go up on bad news, (GDP) because they take it to mean the Fed will continue it's gravy train policy, then the only conclusion one can logically come to, is that for the last 4 + years, the markets and the Fed have essentially been one in the same.   Let's decouple the Fed from the markets and we'll see what the real levels would be.  I can tell you it won't be 15K.

Jun 27, 2013 6:07AM
The markets are in a definite groove and have been for quite awhile now.  They don't like really good economic news, because then the possibility of being forced off easy Bernanke money comes into play.  No addict wants to face the pain of withdrawal.  On the other hand, if the economic news is bad enough, markets aren't happy either, because earnings reports start to look ugly.  If Obama somehow duplicated Reagan's feat of creating more than a million jobs in a single month (Sept 1983), the markets would rally for a minute before dropping on fears that Bernanke would pull out.  But let's be honest, this isn't a scenario we'll have to worry about. 

Jun 26, 2013 9:15PM
Obamaville - neighborhoods full of houses built of cards
Jun 26, 2013 7:57PM

This author is missing some.



Obama is leaving us (the US) and going to Africa...where he is from I was told.

Great news? Yeah, he will only spend 100 millions dollars in vacations...pennies in the empty bucket from a guy who lives in DC (District of Corruption).


What's your Fuzz....?

Jun 27, 2013 9:00AM
The FED thinks it can replace savings and capital formation by  the printing press.   Banks don't need depositors when they can draw money interest free from the FED.  Depositors are more of a nuisance under Obamanomics.

This means that savings and capital formation go UNREWARDED.  This should slow down growth and insure a tough go once Ben stops the presses.   

The governments job should be to insure that the dollar is a stable store of value.  Something it has ceased to be.  

And this job does not require a central bank.   The solution to a stable dollar is simple.  You create no more dollars every year than your population growth.   

What we have now is unsustainable and will not end well...
Jun 27, 2013 8:05AM
When corruption is all you have and all you are, you use everything you have and everything you can get your hands on to keep yourself alive. THAT is what Wall Street is doing... with YOUR money and YOUR 401K and YOUR Pension. They can't, if YOU yank it out and use it to save yourself from the inevitable CRASH straight ahead.
Jun 27, 2013 10:39AM
Most Business fail simply because most Folks don't know how to run a business. It has nothing to do with Regulations or the FED. What the FEDS think they can do is wipe out the concerns of over 500 Trillion plus in scam Derivatives. Big Banks still have them sitting on their balance sheets and Derivatives were and still are Ground Zero for all of our current Global Problems.

Some Folk want everyone to conveniently forget that America was built on a Fiat Based Money System. Unfortunately, once you do that, a Central Bank is required. We just don't need one that only looks out for the Super Rich while spitting on the poor and middle-class.

Corporations think they can replace all American Workers with cheap slave labors from overseas. Their next step will be to replace all workers with Robots. It all works all too well in their plans of mass depopulation. So far, we have done nothing to stop them, therefore they will continue doing it.

Jun 26, 2013 9:48PM
News is gratifying to "worthless" pundits. O'Bama was not born here and many know this.  He is an idiot and has 'Made our nation a laughingstock, period.  He is a shill and a "con" man.  He is being played at every turn by China and Russia right now.  He is a coward and cannot play with the big boys as they know this and have known it.  He even looks like a fag to me.  Go back to "community" .... where you grew up.  and, that is Africa or Hawaii, right.  Send the drones as am tired of his BS and welfare .... socialist... communistic .... he needs to go.  Yes. I have absoultely not one bit of respect for this "clown". 
Jun 26, 2013 8:38PM

Charley produced a great article..................2,000 comments so far????????

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