Every Stock in the World Just Popped: What You Need to Know

"Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis."

So begins the intro to every article in the Fool's "10% Promise" series. When your stock goes kerplunk -- or kapow! -- our commitment to you is to answer the recurrent question: "What the heck just happened to my stock?"

Sometimes, though, there's more behind a stock's movement than individual events. Sometimes, the entire market just decides to take a great leap forward, or a doozy of a step down. Today was one of those days.

What happened?
According to the market heat map put together by the friendly data crunchers at finviz.com, pretty much everybody who's anybody in stocks went up today. Financials scored the strongest gain. Stocks associated with that industry on the S&P 500 outperformed the tech stocks by a good 60 basis points, rising 4.3% on average. Tech itself was, of course, second, with a 3.7% average gain, followed by companies producing basic materials, utilities, and services.

Industrial and consumer-goods companies lagged behind these industries, suggesting that some concerns remain about the strength of the U.S. consumer -- and the strength of U.S. businesses as well. Meanwhile, safe-haven stocks in the health-care and conglomerates sectors performed poorest of all, rising just 2.3% and 2.0% respectively. Hey -- the time to seek safe havens is when a storm's brewing. On a day like today, with all skies clear, the ports clear out, and investors race for the high seas.

As for actual losers -- you might be surprised to hear this, but out of the entire 500-company S&P index, a grand total of only two stocks lost value today: Sprint Nextel (NYSE: S  ) and Sara Lee (NYSE: SLE  ) . Sprint is apparently facing the prospect of having to come up with a sizeable investment to keep partner Clearwire afloat. Sara Lee suffers from the more mundane difficulty of having just reported disappointing earnings ($0.19 per share if you're curious -- about 32% less than last year).

So what?
So why did the market decide to leap forwardrather than drop downward today? Lots of pundits will be going on CNBC tonight to tell you the answer. I'm sure Cramer will have a few theories of his own to toss out between chaingun-rattle and bullhorn-blowing sound effects. (Some of his observationsmight even be internally consistent.)

Others will tell you the U.S. unemployment data saved the day. Government statisticians told us the lines at the welfare office were 7,000 people shorter this week than last. Today was the first time we got an unemployment claims number below 400,000 since April -- certainly cause for rejoicing. Other investors were probably pleased to see French President Nicolas Sarkozy and German Chancellor Angela Merkel get together for a powwow on how to fix Greece, shore up Italy, and help France avoid an S&P downgrade.

Heck, even fundamentals probably played a role. When Cisco Systems (Nasdaq: CSCO  ) confirmed that rumors of its death had been greatly exaggerated, that was certainly cause for investors to cheer. Elsewhere, we saw ATP Oil & Gas (Nasdaq: ATPG  ) pop when an analyst from Rodman & Renshaw pooh-poohed the risk of a bankruptcy filing. Battery maker A123 Systems (Nasdaq: AONE  ) landed a big supply contract with General Motors (NYSE: GM  ) . And beleaguered News Corp. (Nasdaq: NWSA  ) reminded investors that it doesn't know how to just hack phones -- it can earn a profit as well!

Now what?
When you get right down to it, could the market's move today indicate that the worst is now over and the Dow's ready to start climbing? Yes. Or could it be the calm before the storm, a brief tick up before the next leg down? Also yes.

Either theory's a possibility, and don't let the pundits tell you any different. They don't know any more than you do -- or than I do, for that matter. What I do know is that things are still not good out there in the world. Open any newspaper, and you'll see what I mean. There's trouble in Europe. Trouble in the United States. Turmoil in the Middle East. Plenty of reason for stocks to go down again -- and plenty of opportunities for them to rise as problems get resolved.

Recognizing that, we're going to keep doing what we do here at the Fool: keeping an eye on things for you, and pointing out bargains as we find them -- tomorrow, the next day, and the day after that, for as long as you want to keep reading.

Fool on!

Fool contributor Rich Smith does not own (or short) shares of any company named above. The Fool owns shares of and has created a bull call spread position on Cisco Systems. Motley Fool newsletter services have recommended buying shares of Cisco Systems and General Motors.

We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (7) | Recommend This Article (30)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 11, 2011, at 6:29 PM, optionjunkie wrote:

    I just love level-headed honesty... Happy to just be a fool...

  • Report this Comment On August 11, 2011, at 7:36 PM, Stonewashed wrote:

    Pop goes the weasels.

  • Report this Comment On August 11, 2011, at 11:01 PM, TruffelPig wrote:

    Long-term the forward P/E of the market now likely makes stocks bought around levels of 1100 a good investment. Just look at the time the S&P spent the past 5 or even 10 years below and above the level of 1100. If you have a year or so you will likely be able to sell your stock at a higher S&P level. It is obvious that one should try to pick a company outperforming the S&P and then it gets yummy. Buffet today said that he will buy the more the lower the market goes. With the simple reasoning I just made it should make sense to buy every good stock at a S&P level of 1100. That and the forward P/E makes me believe that the market in the absence of larger catastrophes in the near future won't tank below 1100. And if so, it will probably take only 1 or so year for the market to get back to 1100.

    In contrast to all those analysts in CNBC etc. I am pretty bullish when it comes to the global market and since a lot of profit of US companies comes from those even sluggish US GDP growths still will make the US markets go up. Probably a good idea to have international companies in the stock mix to reduce national risk.

  • Report this Comment On August 12, 2011, at 1:26 AM, MaxTheTerrible wrote:

    "So why did the market decide to leap forwardrather than drop downward today?"

    It's quite simply, really. I just wore my lucky socks today! That is the only reason the market is up...

  • Report this Comment On August 12, 2011, at 4:52 AM, OtherSideIsGreen wrote:

    who knows whats going on. Might just be gambling to get in at this point. read an article earlier on blueearthwm.com how this is a fork in the road and we just need to wait and see a little before deciding whats actually happening

  • Report this Comment On August 12, 2011, at 7:25 AM, TruffelPig wrote:

    The lows of the market are the 38% Fibonaci retracement of the gain between the lows of the market to the highs. It is around 1100 and that is a technical value with super support. If that breaks we see each other at like S&P 800 or so. But it won't for the time being.

    In addition when I threw my chicken bones they told me the market will be between 1150 and 1250 for a while until it decides to move based on good or bad news.

  • Report this Comment On August 12, 2011, at 10:46 AM, joaquingrech wrote:

    I could give you an in-depth answer to market movements but MaxTheTerrible said it better than me.

    Please, don't wash them often.

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