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Why Vale, MBIA, and Gold Fields International Jumped Today

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

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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.

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Stocks Mentioned

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

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

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