Dow off 243 as earnings woes slam stocks

Disappointing results from 3M, DuPont and United Technologies set off broad selling. Downgrades of Spanish regions hit European stocks. Apple falls despite its new iPad. Facebook results cheer; Netflix do not. Oil falls below $87.

By Charley Blaine Oct 23, 2012 12:04PM
Charley BlaineUpdated: 9:25 p.m. ET

Stocks slumped today as more companies reported lower-than-expected revenue and cut earnings guidance. The drubbing sent the Dow Jones industrials ($INDU) to its second loss of more than 200 points in three sessions and set off worries that the pullback is a signal of a weakening economy ahead.

The Nasdaq Composite Index ($COMPX) closed below 3,000 for the first time since Aug. 6. Apple (AAPL) shares slid after the company announced its new iPad Mini tablet device would be priced at $329. Many investors were hoping for a $299 price, arguing it would sell better at a lower price.

After the close, Facebook (FB) shares jumped $1.98, or 10.2%, to $21.13 after reporting that earnings of 12 cents a share after one-time expenses beat the Street estimate by a penny. Revenue of $1.26 billion was up 32% from a year ago and beat the Street estimate by $30 million. Shares were up 18 cents to $19.50 in regular trading.

But Netflix (NFLX) shares were down $11.22, or 16.3%, to $57.12 after hours as results from its video streaming business weren't as strong as expected and the company starts to produce original programming. Earnings fell to 13 cents a share from $1.16 a year ago. The company may see a fourth-quarter loss.

The Dow closed down 243 points to 13,103. The blue chips had been down as many as 263 points. The Standard & Poor's 500 Index ($INX) was off 21 points to 1,413. The Nasdaq dropped 27 points to 2,990.

Article continues below.
The Nasdaq-100 Index ($NDX) fell 29 points to 2,666. Apple was down $20.67 to $613.36.

Also after the close, Panera Bread (PNRA) shares jumped $8.91, or 5.6%, to $169.25.
The company's third-quarter revenue and earnings beat estimates, and the company raised its earnings guidance to $1.72 to $1.74 a share for the fourth quarter, up from 41.60 to $1.70.

The worst Dow loss since June
The Dow's loss was its worst since June 21, and it was the first time since late November 2011 there were two 200-point losses in three days. (The S&P and Nasdaq had larger losses on Friday.)

How much more the market will drop is not clear. The S&P 500 has broken below its trend line since the June 4 market bottom, a bearish signal. The Nasdaq came close to -- but did not drop below -- its 200-day moving average of 2,970, suggesting there is buyer support at that level.

At the same time, forces are building within the market that could stabilize matters, assuming the economy cooperates. The relative strength indexes for the Dow and S&P 500 are nearing 30. The Nasdaq's RSI was at 27 today. The index measures the current price against results over a set period of time, in this case, over 14 sessions. A reading below 30 suggests an index or security is oversold. (Apple's RSI was 31.84.)

The market opened badly from weaker-than-expected results from industrial giants 3M (MMM), DuPont (DD) and United Technologies (UTX).

At the same time, European stocks fell, with German and French stocks dropping more than 2% after Moody's downgraded credit ratings for regions in Spain. The stress in Europe set off a rally in the dollar and hit commodities.

Wednesday brings earnings from AT&T (T), Boeing (BA), Eli Lilly (LLY) and game-maker Zynga (ZNGA), among others. Zynga results will likely be weak. The company is cutting 5% of its work force.

The government reports on new-home sales and oil inventories. The Federal Reserve will make a policy announcement at 2:15 p.m.

A slump on commodity prices
Crude oil (-CL) in New York dropped to $86.67 a barrel, down $1.98, its lowest settlement price since July 12. Brent crude was off $1.11 to $108.33 a barrel after falling to as low as $107.31.

Pump prices were lower. The national average retail price of gasoline was $3.648 a gallon, according to AAA's Daily Fuel Gauge Report, down from Monday's $3.665 a gallon and down 4% this month alone.

Gold (-GC) settled down $16.90 to $1,710.20 an ounce.

The dollar's rise meant interest rates were lower. The 10-year Treasury yield was down to 1.764% from Monday's 1.798%.

Energy prices -- New York close



Tues.     Mon.

Month chg.

YTD chg.
Crude oil (-CL)

$86.67

$88.65

-5.99%

-12.30%
(per barrel)











Heating oil (-HO)

$3.0308

$3.0668

-4.06%

4.00%
(per gallon)











Natural gas (-NG)

$3.5350

$3.4520

6.48%

18.27%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.6050

$2.6348

-10.79%

-1.97%
(per gallon)











Brent crude 

$108.33

$109.44

-1.64%

0.88%
(per barrel)











Retail gasoline

$3.6480

$3.6650

-3.67%

11.36%
(per gallon; AAA)












DuPont reports a profit fall, will lay off 1,500
DuPont reported a lower-than-expected quarterly profit and announced 1,500 job cuts to offset falling sales around the world. The news was a shock to investors, and shares tumbled $4.51 to $45.25 and pulled the materials sector of the S&P 500 nearly 3% lower. It was the worst-performer among the 30 Dow stocks and second-worst among S&P 500 stocks.

United Technologies reported a 3.3% decline in third-quarter earnings and cut its sales forecast for the year, citing weak demand from airlines and an uncertain economy. The report sent shares 76 cents lower to $77.07.

3M lost $3.80 to $88.73 after the diversified U.S. manufacturer cut its profit forecast for the full year as acquisition costs and a strengthening dollar during the quarter hurt margins. 3M generates more than 60% of its revenue outside the United States.

The three companies accounted for nearly 70 points of the decline on the Dow industrials. Declines in Chevron (CVX) and Exxon Mobil (XOM) -- because of falling oil prices -- contributed an additional 41 points to the Dow's loss.

Whirlpool (WHR) jumped $7.50 to $93.81 after reporting a higher-than-expected quarterly profit, helped by price increases and tight cost controls. The world's largest appliance maker also raised its earnings outlook for the year.

Yahoo (YHOO) shares were up 90 cents to $16.67. Chief Executive Marissa Mayer’s first earnings call appearance reignited Street interest in the beleaguered Web portal’s future. The company got a lift from its sale of Alibaba shares, but, to the surprise of some analysts, Yahoo’s core business also performed better than expected.

The Fed meets; Bernanke speculation builds
The Federal Reserve's policy committee is scheduled to begin a two-day meeting on interest rates on Tuesday. The Federal Open Market Committee is likely to hold off from taking new action, opting instead to review the impact of last month's easing of credit while keeping a low profile in the last gathering before the Nov. 6 election.

There was chatter today about how long Chairman Ben Bernanke will remain in his post. His term as chairman expires in 2014. If Mitt Romney wins the presidential election, he may try to get Bernanke to leave his job early. It is not clear if he wants a third term.

It's hard to find stocks in the black
Materials, energy and financial stocks were the weak links in the market, but the 10 S&P 500 sectors were all lower. Only 67 S&P 500 stocks were higher, led by Whirlpool, Harley-Davidson (HOG) and Coach (COH).

Monster Beverage (MNST), DuPont, Regions Financial (RF) and Assurant (AIZ) were the laggards.

Consumer discretionary stocks were higher, thanks in part to Coach and Harley-Davidson, up $3.98 to $58.15 and $3.36 to $46.89, respectively.

Only two of the 30 Dow stocks were higher: Intel (INTC) and Microsoft (MSFT), the publisher of MSN Money.

Only 35 Nasdaq-100 stocks were higher, led by Yahoo and Virgin Media (VMED). Monster Beverage (MNST) and Randgold Resources (GOLD) were the laggards. Monster Beverage sagged for a second day after the Food & Drug Administration confirmed that it is investigating reports of people dying after drinking its energy drinks.

Short hits from the markets -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.1000%

0.090%

11.11%

900.00%
5-year Treasury note 

0.758%

0.779%

20.32%

-8.67%
10-year Treasury note

1.764%

1.798%

7.76%

-5.72%
30-year Treasury bond

2.915%

2.947%

-3.86%

0.90%
Currencies











U.S. Dollar Index

80.08

79.736

0.07%

-0.55%
British pound

1.5946

1.6021

-1.32%

2.63%
(in U.S. $)

 








U.S. $ in pounds

£0.627

£0.624

1.34%

-2.56%
Euro in dollars

$1.30

$1.31

0.99%

0.18%
(in U.S. $)

 








U.S. $ in euros

€ 0.770

€ 0.765

-0.98%

-0.18%
U.S. $ in yen 

80.06

79.93

2.69%

3.84%
U.S. $ in Chinese

6.27

6.25

-0.14%

-0.85%
yuan











Canada dollar

$1.008

$1.008

-0.89%

2.71%
(in U.S. $)

 








U.S. dollar 

$0.993

$0.992

0.97%

-2.64%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,709.40

$1,726.300

-3.64%

9.10%
(per troy ounce)

 








Copper (-HG)

$3.570

$3.622

-5.02%

3.89%
(per pound)

 








Silver (-SI)

$31.7930

$32.252

-8.05%

13.89%
(per troy ounce)

 








Wheat (-ZW)

$8.6875

$8.783

-3.74%

33.09%
(per bushel)

 








Corn (-ZC)

$7.5600

$7.613

-0.03%

16.94%
(per bushel)

 








Cotton 

$0.7427

$0.769

5.12%

-18.99%
(per pound)

 








Coffee

$1.6085

$1.645

-7.29%

-29.96%
(per pound)

 








Crude oil (-CL)

$86.67

$88.650

-5.99%

-12.30%
(per barrel)










 

483Comments
Oct 23, 2012 12:14PM
avatar
How, could Obama have won when he had no solutions only attacks?
Oct 23, 2012 12:20PM
avatar

Guess Nobama's debate "victory" wasn't enough to "stimulate" the markets this morning.

 

What a joke.  The financial collapse of this country is all but imminent, and Nobama could be the one person that holds the final deal of cards in his hands that determines whether or not this country slips past recession into a depression.  It's understandable that we need healthcare in this country, and that Romney dosen't have all of the answers.  BUT, there is a BIG difference here, Romney will NOT tax the he!! out of the "rich" and "super rich", sending more people to unemployment, closing more factories, sending more jobs overseas where this (or the next) administration will be powerless to do anything about it, seeing that China basically OWNS OUR A$$ES...

 

But not to worry, remember, Nobama said "the middle class is doing fine".

 

Nobama...NO WAY....

 

GO ROMNEY 2012!!!

Oct 23, 2012 12:45PM
avatar

Based on the number of times Barry interrupted Mitt, then yes, he did win. For lack of manners, condescension and all around boorishness.

Final tally: Romney/Ryan 4, Obama/Biden0.

BHO, one and done.

Oct 23, 2012 1:21PM
avatar

Brutus625: "Here's a theory: Perhaps stocks are down because the markets believe Romney will win the election. Now don't get your britches in a bunch just yet. Is it possible that the market believes that if Romney gets elected, the flow of free money, either from federal gov borrowing and spending and/or from the Federal Reserve, will come to a halt? This entire market is built on little else but a nasty cocktail of QE, gov spending money it doesn't have, and devaluation of the dollar, and it's been this way for a few years now. If the market believes this free money will come to an end under a Romney administration, or as least slow way down, shouldn't it be expected that the market will drop as Romney's chances seem to improve? On the other hand, wouldn't stocks continue to rocket higher if they thought another 4 years of free cash was guaranteed, just like the last 4 years?"


Stock market going down probably has more to do with the:

1. Fiscal cliff (not waiting around to see the fireworks).

2. Taking profits and long term capital gains (while they're still 15% and while there are gains).

3. Retiring boomers who have caused a continuing decline in stock holdings as they use the money, or shift it into "safer" investments.

Oct 23, 2012 2:17PM
avatar
More from todays London Telegraph -

But here’s why it was also a vote loser. For a start, Twitter immediately lit up with examples of how the US Army does still use horses and bayonets (). More importantly, this was one example of many in which the President insulted, patronised and mocked his opponent rather than put across a constructive argument. His performance was rude and unpresidential. Obama seemed to have a touch of the Bidens, wriggling about in his chair, waving his hands dismissively and always – always – smirking in Romney’s direction. By contrast, Romney sucked up the abuse and retained a rigid poker face all night. He looked like a Commander in Chief; Obama looked like a lawyer. Who would you rather vote for?
Oct 23, 2012 12:37PM
avatar
Hard to fathom that people still cling to the remote idea that this " part of town" gives a flyin f or a rolling doughnut about anything but personal profits. Made off went to jail for less than these clowns do daily. It isnt about the guy who gets elected its about the guys who get protected.
Oct 23, 2012 12:26PM
avatar
Wall street has been looking for any reason to sell off and take away gains for this year. This has nothing to do with any weakness anywhere.  Wall Street has no interest in any good reports or news right now. They are now in manipulation modetill most if not all the gains are lost. Half will be lost by Friday!!
Oct 23, 2012 12:37PM
avatar

thought it would be in 2013 this final down turn would happen but seems like it's early

 

the western economies are collapsing before our eyes folks.

Oct 23, 2012 1:33PM
avatar

POOF!!

 

and there goes QE3

 

and POOF!

 

there goes Bernanke...running for the hills!

 

PATHETIC!

Oct 23, 2012 2:34PM
avatar
Didn't this guy say gas was cheap because the economy was bad??????????

Well - ah um ah um ah um.... ...

Oil is down - gas is not cheap - and the economy is - ah um ah um worse....
Oct 23, 2012 2:17PM
avatar
Osama - no I mean Obama -   "we have fewer horses and bayonets"

Also we have boats that planes land on and we have boats that go under water and..

WE HAD 3 MILITARY BASES WITHIN 15 MINUTES OR SO TO PROTECT OUR PEOPLE AND YOU WENT TO BED....

Sorry - Well I guess your the best President we have ever had - NOT!

Oct 23, 2012 12:45PM
avatar

nothing but "woes" for the past 3.6yrs under the obama regime, my God!! this azzwipe is the absolute anti Christ for this country, the true anti Christ is barrack hussein obama for all intents and purposes, he's managed to destroy the economy, our standing in the world, small business, big business you name it, small business are either bankrupt or struggling or big businesses just going overseas to get away from staggering taxes and regulations, our AMerican ambassador is dead along with 3 others, 2 AMerican border patrol agents killed with guns from the Fast and Furious fiasco, al queida is resurging in Libya and very much alive and well,  I mean WTF!! this bastard needs to go before we go the way of the dinosaur and everybody knows it.

 

And just to add, Pres Romney won the last debate hands down a true leader and very Presidential, sorry lib idiots in the media, but nice try to cover for you disastrous false messiah, you only sound desperate, very pathetic, sooooooooooooooo pathetic

Oct 23, 2012 12:41PM
avatar
The word is DOWN...not "off".   Can't anyone tell the TRUTH any more?
 And,telling only half of a story is NOT the same as the truth.  
  I believe this selloff is directly related to the election in two weeks..Hell,if I had any money in stocks (I'm already cashed out) I would take any profits now,and hold my card close to see what happens. Scary times...
Oct 23, 2012 12:53PM
avatar
Wall street and the big job creators .. Well after 10 yrs of tax cuts and free money from the feds and this is the best the rich and wall street can do ??? LMFAO... Only in the land of the stupid...
Oct 23, 2012 12:42PM
avatar
Honey Boo Boo and her mother stink.
Oct 23, 2012 1:10PM
avatar
Facebook,Netflix,Yahoo and Whirlpool are all up.This says that people are washing the old clothes instead of buying new.Talking to friends on the internet instead of using gas to go visit.Watching movies at home instead of the way over priced theater.And playing games on the computer instead of going on vacations.There is not,has not been and will not be an economic recovery in this country for a while.Today's market slide is all the BS burning away and REALITY being left to deal with.CRASH   BABY   CRASH ! ! ! ! ! !
Oct 23, 2012 12:47PM
avatar

The bayonets and saddles will be purchased at a premium from china and resold to uncle sammy for a small profit.

 

The moneychangers appear more like the guy who said i would gladly pay you tuesday for a hamburger today.

 

Funny how human character remains the same over time.

Oct 23, 2012 1:08PM
avatar

More disappointing earnings lead to falling stock prices. And it looks like we may have another drop this afternoon- so hold on to something - like a few short trades to get you through this week.

All the QE, bond buying has done nothing to help.

Oct 23, 2012 1:11PM
avatar

According to the Washington Post yesterday China has reduced it's balance of T bills from 12% in 2008 to about 8% now.  The chinese are bailing on US debt/currency and have been for the last 4 years of Obama + Pelosi + Reid.  The US companies and citizens + SSA + Civil Service Retirees + Military Pensions presently hold 61% of the $15 trillion dollar debt.  So now tell me who's screwed when the ship sinks?  THE USA printing presses will run and we will pay other countries to print even more as it's cheaper there.  Hyper Inflation called "stagflation" 3 times worse than in the 70's.  That's way worse than a recession/depression that they are borrowing trillions to avoid!!  At least in a depression the money is worth more.  Not one investor/banker/official responsible for the world collapse has been sent to prison yet.  No significant laws have been passed to stop it happening again.  That's were all the bail out money went to pay all the banks of the world.

 

Rent "2016" from the Redbox now (before you vote) to see what the end of 4 more years of Obama's policies will bring.

 

 

 

 

Oct 23, 2012 2:13PM
avatar
The Daily Roll Call - October 23rd, 2012

If you knew nothing about Barack Obama and Mitt Romney except what you saw in their final debate, you would have assumed that Romney was the incumbent president, that Obama was the challenger trying to unseat him, that Romney was clearly leading in the polls going in and that he remained there going out. You wouldn’t necessarily think Romney won the debate, but you would think he was winning the race.

It was absolutely clear that both candidates understood that this debate was entirely about Mitt Romney. Romney’s only goal was to seem presidential, and Obama’s only goal was to make Romney seem not presidential. By that measure, Romney clearly achieved his aim and Obama clearly did not. Romney did this by treating this debate very differently than the other two. He didn’t really try to score points, and he wasn’t afraid to express agreement with Obama, which he did remarkably often. His goal was to answer every question with a calm, responsible attitude and convey sobriety and level-headedness.  

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