The world's equity markets are extremely complex and interconnected -- perhaps too interconnected, as we saw a few years back -- and it can be difficult to discern how exactly the gears are working together. Is this stock rising because of X? Or perhaps it's Y? Maybe someone pressed the wrong button; the weather may have something to do with it; possibly the Super Bowl is to blame; are people just flipping coins?
Sometimes it's just not so clear what the psychology behind the trade is. But not today: Monday's three biggest S&P 500 Index (SNPINDEX:^GSPC) laggards all fell for good reason, although the index itself added 8 points, or 0.5%, to close at 1,640.
The most notable loser in the whole index was chip giant Intel (NASDAQ:INTC), which lost 3.6% after a chorus of discontent from Wall Street investment houses. Intel, historically, has dominated the market for PC processors, but with PCs on the down and out, shareholders and analysts alike are pressing the company to establish itself in the mobile market. Intel isn't totally unprepared -- its new Atom processors are designed for mobile devices -- but concerns that margins are destined to fall drove the stock lower today.
Intel has such a frightening presence in the chipmaking industry that its slump today rippled out to rival SanDisk (NASDAQ:SNDK), which saw shares slump 2.9% Monday. SanDisk, which makes flash storage as opposed to semiconductors and is only a fraction of Intel's size, tends to be a more volatile stock and more of a growth play than the blue-chip mainstay. Trading at more than 30 times earnings, it's also a bit more expensive after a 63% rally in the past year.
Lastly, residential construction bigshot PulteGroup (NYSE:PHM) shed 2.9%. Homebuilders have been seriously hit in the past few weeks as interest rates sharply rise ahead of the Federal Reserve's anticipated pullback on quantitative easing efforts later this year. PulteGroup alone has fallen 14% in the last month; rising interest rates mean higher mortgage rates, and with 30-year mortgage costs jumping from less than 3.6% annually in April to more than 4.6% currently, markets fear that homebuyers will scale back.
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