Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Vale, MBIA, and Gold Fields International Jumped Today

By Dan Caplinger - Nov 28, 2016 at 7:01PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Despite a market pullback, these stocks climbed. Find out why.

The stock market didn't manage to sustain its holiday cheer on Monday, giving up ground as major market benchmarks gave back some of their record gains from the week of Thanksgiving. Most market commentators didn't make much of the decline, pointing out that a pullback is natural after such strong gains earlier in the month. Moreover, some stocks continued to rise, and Vale ( VALE -2.00% ), MBIA ( MBI -2.58% ), and Gold Fields International ( GFI 0.64% ) were among the best performing stocks on the day. Below, we'll look more closely at these stocks to tell you why they did so well.

Image source: Vale.

Vale keeps climbing

Vale jumped 8%, reaching levels that it hasn't seen in nearly two years as investors continue to be more confident about the prospects for key commodities markets. Vale produces substantial amounts of iron ore, and the rise in steel stocks over the past months has stemmed from the belief that an increased emphasis on construction and infrastructure activity might reignite the steel-making industry and therefore boost demand of the raw materials needed for its manufacture. At the same time, broader improvement in commodities markets could help lift the entire Brazilian economy, creating a virtuous cycle of economic growth in the key Latin American emerging market that could lift Vale even higher. Some worry about whether hoped-for gains in steel demand will actually come to pass, but for now, optimism is keeping Vale moving higher.

MBIA gets some subsidiary financing

MBIA also climbed 8% after making an announcement about its wholly owned MBIA Insurance subsidiary. The company said that MBIA Insurance has accepted a commitment letter to get up to $325 million in senior financing, contingent on MBIA's providing $38 million in subordinated financing to its subsidiary. The move will help MBIA Insurance pay an anticipated claim on certain notes that were in default, triggering the need for the insurer to step in to meet its commitments. CFO Anthony McKiernan is still hopeful that it might be able to obtain full reimbursement of the claims to be paid, but investors were apparently pleased that an acceptable compromise has been reached for now.

Gold Fields shines

Finally, Gold Fields International was up 7%. Monday was a good day for the gold market, with bullion prices rising about $10 per ounce. Nevertheless, with a close at around $1,194 per ounce, gold has fallen dramatically from its highest levels of the year, and many fear that rising interest rates in the U.S. market could deal an even bigger blow to gold's near-term prospects. For Gold Fields, rising prices are particularly important, because it has relatively high all-in sustaining costs of as much as $1,000 per ounce. With several of its peers seeing figures in the $750 to $900 per ounce range, Gold Fields has more to gain when prices rise -- and more to lose if they continue their recent declines.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Vale S.A. Stock Quote
Vale S.A.
$12.73 (-2.00%) $0.26
Gold Fields Limited Stock Quote
Gold Fields Limited
$11.00 (0.64%) $0.07
MBIA Inc. Stock Quote
$11.32 (-2.58%) $0.30

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/06/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.