Dow falls 205; earnings fears slam stocks

The slump is the worst since June and comes on the 25th anniversary of the 1987 crash. McDonald's and GE say the global economy is struggling. Microsoft, Google and Chipotle slide. Apple drops under $610. Oil and gold drop.

By Charley Blaine Oct 19, 2012 12:21PM

Charley BlaineUpdated: 7:52 p.m. ET

Stocks suffered their worst one-day losses in about four months today as earnings from some of the biggest companies missed estimates, particularly on revenue, because of slowing economies at home and abroad.

The slump came on the 25th anniversary of the 1987 market crash that saw the Dow Jones industrials ($INDU) fall 508 points, or 23%, in a single day.

While today's slump was painful, it was nothing like 1987. The Dow fell 205 points in its worst loss since June 21. Earnings from McDonald's (MCD) and General Electric (GE) today and Microsoft (MSFT), the publisher of MSN Money, Thursday disappointed investors. In addition, Google (GOOG) was lower again after third-quarter results proved disappointing, and Chipotle Mexican Grill (CMG) shares were crushed, falling $42.93 to $243, because of slowing sales growth.


There was some cheer from the housing industry. The National Association of Realtors reported a small decline in existing-home sales in September, but prices were higher and inventories were shrinking.

The Dow finished at 13,344; the blue chips had been down as many as 237 points. The Standard & Poor's 500 Index ($INX) dropped 24 points to 1,433. The Nasdaq Composite Index ($COMPX) fell 67 points to 3,006. The S&P 500 and Nasdaq also suffered their largest losses since June 21. The indexes were lower for the second day in a row; the Nasdaq's two-day loss of nearly 99 points was its worst since May 4.


Article continues below.

The Nasdaq-100 Index ($NDX) was down 66 points to 2,678, weighed down by Google, Chipotle, Microsoft and Apple (AAPL), which represents more than 15% of the market capitalization in the index.

Apple, off $22.80 to $609.84, closed below $610 for the first time since Aug. 3 and below its 150-day moving average. The shares are down 13.1% since peaking at $702.10 on Sept. 19.


The market slump took gold (-GC) down. The metal settled down $20.70 to $1,724 an ounce. Crude oil (-CL) in New York settled down $2.05 to $90.05 a barrel.


For the week, gold was down 2%. Crude oil was off a touch less than 2%. Brent crude was off $2.35 to $110.07. The national average retail price of gasoline was $3.715, according to AAA's Daily Fuel Gauge Report. That was off 2.2 cents from Thursday and down 9.5 cents, or 2.5% from a week ago.

Despite the slump, the Dow finished with a 0.1% gain on the week. The S&P 500 was up 0.3%. The Nasdaq dropped 1.3% for the week. The market had solid rallies Monday and Tuesday.


For the year, the Dow is up 9.2%, with the S&P 500 up 14% and the Nasdaq up 15.4%.


Markets for the week



10/19/2012

10/12/2012

% chg.

YTD chg.
Dow Industrials

13,343.51

13,328.85

0.11%

9.22%
S&P 500

1,433.19

1,428.59

0.32%

13.96%
Nasdaq 

3,005.62

3,044.11

-1.26%

15.37%
Russell 2000

821.00

823.09

-0.25%

10.81%
Crude oil 

$90.05

$91.86

-1.97%

-8.88%
(per barrel)

0.00

0.00

0.00%

0.00%
U.S. Dollar Index 

79.69

79.74

-0.07%

-1.04%
10-yr. Treasury

1.77%

1.66%

6.31%

-5.51%
Gold

$1,724.00

1,759.70

-2.03%

10.03%


Why the market slumped

What's bothering the market starts with the global economy.

 

"Europe is tough," GE CEO Jeff Immelt said on today's earnings call. "Asian resource risk countries are OK, and the U.S. had packets of growth but still some uncertainty."

Add to that concerns about slowing growth in the search-engine business and the slide in personal computer sales.


Semiconductors and biotechnology stocks were among the biggest losers today.


Advanced Micro Devices (AMD) was down 44 cents to $2.18. The percentage decline was the worst among S&P 500 stocks. The company reported weak earnings late Thursday because of the slumping personal-computer market, and it plans to cut its workforce by 15%.


Marvell Technology (MRVL) was down $1.26 to $7.57 on the chipmaker's lowered revenue forecast and the surprise departure of its chief financial officer on Thursday. Many brokers downgraded the stock.


The Philadelphia Semiconductor Index ($SOX) was down 11 points to 365. It's down just 0.4% for the week but off 4.4% for the month.


Google was down $13.21 to $681.79 because of worries that its revenue growth will be constrained as consumers surf the Web via their smartphones. The shares are down 8.7% this week and nearly 10% for the month.


Facebook (FB), facing the same challenges, was up 2 cents to $19.


Also falling because of weak outlooks were Air Products (APD), a producer of industrial gases,  and Parker Hannifin (PH), which makes products for industrial process. Shares were down $5.36 to $79.99 and $6.57 to $78.50, respectively. Air Products was the sixth-worst S&P 500 performer; Parker Hannifin was the fourth-worst.


"We are starting our 2013 fiscal year with weak economic momentum worldwide," Air Products CEO John McGlad said in a statement.

The pressures of weak revenue growth will a concern next week. Due to report include:
  • Monday: Caterpillar (CAT), Freeport-McMoRan Copper & Gold, (FCX) and Texas Instruments (TXN).
  • Tuesday: 3M (MMM), DuPont (DD), Facebook (FB), United Parcel Service (UPS) and Whirlpool (WHR).
  • Wednesday: AT&T (T), Boeing (BA) and Ryland (RYL).
  • Thursday: Amazon.com (AMZN), Apple and ConocoPhillips (COP).
  • Friday: Arch Coal (ACI) and Weyerhaeuser (WY). 
Energy prices -- New York close



Fri.     Thur.

Month chg.

YTD chg.
Crude oil (-CL)

$90.05

$92.10

-2.32%

-8.88%
(per barrel)











Heating oil (-HO)

$3.1176

$3.1669

-1.32%

6.98%
(per gallon)











Natural gas (-NG)

$3.6170

$3.5870

8.95%

21.01%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.6721

$2.7269

-8.49%

0.55%
(per gallon)











Brent crude 

$110.14

$112.42

-3.91%

2.57%
(per barrel)











Retail gasoline

$3.7150

$3.7370

-1.90%

13.40%
(per gallon; AAA)












A dubious anniversary

The 23% Dow decline in 1987 hasn't been equaled since, not even during the 2008 crash. What was remarkable about the 1987 event was that the averages still ended 1987 with a gain. The market recovered all of its losses in about 15 months.


The Dow and the S&P 500 are still 6% and 8% below their 2007 peaks. The Nasdaq, however, is 5% over its 2007 high -- thanks especially to gains for Apple and Google.


The Dow's 508-point loss wasn't exceeded until Oct. 26, 1997, when the Dow fell 554 points as a financial panic in Asia hit markets. On Sept. 17, 2001, the first day of trading after the Sept. 11, 2001, terror attacks, the Dow fell 685 points.


The two largest one-day plunges occurred in the fall of 2008 after the Lehman Bros. collapse.


Today's problems are quite different from the 1987 crash, when the market fell due to program trading that fed upon itself throughout the day. Also, interest rates had been rising in the spring and summer.An overheated market ultimately fell over. There were worries about tax increases and a slowing economy as well.

Home sales dip, but prices rise
The day's big economic report was existing-home sales, which fell fell 1.7% from August to September to a seasonally adjusted 4.75 million units, the National Association of Realtors said. But August sales had risen some 8% from July.

The median price of a home rose 11.3% from a year ago to $183,900, the highest level since 2005. The inventory of homes for sale fell to 5.9-month supply, the lowest level since March 2006.

The future looks stronger -- if the economy holds up, economists said today. Homebuilding shares were mostly higher.


Not much to cheer about

Only 20 stocks, including Fortune Brands (FBHS) and Autonation (AN), hit all-time highs today. Exxon Mobil (XOM), Lennar (LEN), Lowe's (LOW) and Capital One Financial (COH) were among 84 stocks hitting 52-week highs.


Only one of the 30 Dow stocks was higher: Home Depot (HD), up 9 cents to $61.89. Rival  Lowe's added 7 cents to $32.64.


Only 31 &P 500 stocks were higher, led by Capital One, Robert Half International (RHI) and SanDisk (SNDK). Advanced Micro Devices, Chipotle, E*Trade Financial (ETFC) and Parker Hannifin were the laggards.


Only six Nasdaq-100 stocks were higher, led by SanDisk and O'Reilly Automotive (ORLY). Marvell and NVidia (NVDA) were the laggards.

Short hits from the markets -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0900%

0.090%

0.00%

800.00%
5-year Treasury note 

0.751%

0.780%

19.21%

-9.52%
10-year Treasury note

1.768%

1.826%

8.00%

-5.51%
30-year Treasury bond

2.937%

3.007%

-3.13%

1.66%
Currencies











U.S. Dollar Index

79.688

79.425

-0.42%

-1.04%
British pound

1.6015

1.6054

-0.90%

3.07%
(in U.S. $)

 








U.S. $ in pounds

£0.624

£0.623

0.90%

-2.98%
Euro in dollars

$1.30

$1.31

1.35%

0.55%
(in U.S. $)

 








U.S. $ in euros

€ 0.768

€ 0.765

-1.34%

-0.54%
U.S. $ in yen 

79.49

79.29

1.95%

3.10%
U.S. $ in Chinese

6.27

6.25

-0.10%

-0.81%
yuan











Canada dollar

$0.000

$1.015

-100.00%

-100.00%
(in U.S. $)

 








U.S. dollar 

$0.993

$0.985

0.97%

-2.64%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,724.00

$1,744.700

-2.81%

10.03%
(per troy ounce)

 








Copper (-HG)

$3.638

$3.743

-3.21%

5.86%
(per pound)

 








Silver (-SI)

$32.0970

$32.868

-7.17%

14.98%
(per troy ounce)

 








Wheat (-ZW)

$8.7250

$8.685

-3.32%

33.67%
(per bushel)

 








Corn (-ZC)

$7.6150

$7.608

0.69%

17.79%
(per bushel)

 








Cotton 

$0.7688

$0.777

8.82%

-16.14%
(per pound)

 








Coffee

$1.6165

$1.586

-6.83%

-29.61%
(per pound)

 








Crude oil (-CL)

$90.05

$92.100

-2.32%

-8.88%
(per barrel)










 
635Comments
Oct 19, 2012 12:56PM
avatar

I own a business and decide that I need to hire a CEO. This CEO is responsible for the profits of the company, the welfare of the employees, the budget, spending, basically the overall good of the company.

After 4 years with this CEO, he's overspent the company into bancruptcy, He's fired many of the employees because the number of people working is way less that when he became CEO, he has pissed off almost all of my vendors and company heads that I had a relationship with, my expenses have gone way up ..... and it's looking like I will probably have to close the company unless I get some help. But, the banks are tired of lending me money so they are saying 'NO" to another loan?? 

 

Should I keep this CEO on or should I fire him. Only a total idiot would say ..."keep him on!!"

Oct 19, 2012 12:43PM
avatar
Hmmm could earnings finally be catching up with companys?  You can only lay off so many and cut so much waste/costs, there is just no demand.
Oct 19, 2012 12:48PM
avatar
150 point drop is a "slump" but a 50 point rise is a "soar"!  Obamanomics...
Oct 19, 2012 12:39PM
avatar
Home prices back to 2005 levels - the height of the bubble.  Has the dollar been devalued that much or are we in the process of inflating another bubble?  Either way, it's a recipe for disaster when home prices are up 11% even as household incomes are dropping.
Oct 19, 2012 1:07PM
avatar

Ponder this one!

 

"Face it: If Mitt Romney wins the election, it will be bad for the country.  If Obama wins, it will be worse."

 

Chicago Tribune editorial page 10/19/12 

Oct 19, 2012 12:57PM
avatar
5 point plan vs. 1 point plan.

Any plan is better than no plan... ...
Oct 19, 2012 1:13PM
avatar
The reality of Obamanomics!!! Go Romney!!
Oct 19, 2012 12:52PM
avatar

Today's drop indicates you need to know these three things: FUNDAMENTALS, FUNDAMENTALS, FUNDAMENTALS !!!

 

When earnings fail to meet expectations; stock prices fall. And to compound that with a very weak housing market: Sales continue to fall as well as inventories. Not a good mix.

 

No conspiracies, no manipulations, just a fundamental market correction.

Oct 19, 2012 12:54PM
avatar

"The majority of small business owners are putting greater emphasis on the bottom line and do not plan on hiring in the next year, according to a recent survey from The Hartford Financial Services Group (NYSE: HIG).

Only 33% of the 2,000 business owners surveyed by Hartford are optimistic that the national economy will strengthen this year. They also cited slow economic growth (67%), taxes (59%) and uncertainty with federal regulations (56%) as major risks to small businesses."


- Mathew Rocco



Oct 19, 2012 1:09PM
avatar
Earlier in the week, they made a BIG HOOPLA about New Housing Starts being up, and pulling the market with them. Now they say Home Resales are down. WTF are they doing throwing New Homes at a market that's already saturated with Foreclosed and For Sale Properties!!!!
Oct 19, 2012 1:11PM
avatar
I don't believe this housing b/s, in this part of the city the houses that are selling, are selling for around 55% of the value they were in 05.

The houses are mostly being bought by investors, and that is starting to slow if not stop. Many the houses that they have bought now have rent reduced signs in the front yards. Along with many just sitting empty with no sign of activity, yards are not maintained and fliers hang on doors for months.

One other problem that I hear from people in the business, is that the investors are hiring the cheapest SOB to do the renovations, and quality of the homes after the work is done is very sad indeed.

Oct 19, 2012 1:03PM
avatar
The watchdog, or IAEA, suspects that Iran carried out explosives tests at the Parchin site back in the early part of the decade, tests consistent with the construction of a nuclear weapon. Iran denies that its nuclear program has a military dimension, but it will not let inspectors into Parchin.

By the way Biden they have drones, planes and you only need a backpack...

The worst administration I have ever seen. Makes you want Carter back... ...
Oct 19, 2012 1:12PM
avatar
Gawk said:
"The crash of 87. How soon people forget what a disaster the republicans left our country back then.  And in came Clinton to clean up and here we are again.  cleaning up after another disastrous republican tenure."

TOO FUNNY!!!!!!!!!!
You blame that one TOTALLY on the guy who was in office when the bottom fell out, but you blame this one TOTALLY on the predecessor of the guy in office when the bottom fell out!!!!!

SPIN ON DUDE!!!!!!!!!!!!!!!!!!!!!!
Oct 19, 2012 12:48PM
avatar
...

If you look at earnings now, you can see why companies where holding on to cash. They will need it to get through this economy.

Lostonwhereever: You are going to see a bunch of negative crazy stories come out as that is all Obama has right now... ... ...
Oct 19, 2012 1:23PM
avatar
The future looks stronger -- if the economy holds up. "We are expecting this market, and the housing market generally, to continue to improve and outperform the rest of the economy over the next few quarters,"  WHAT  the helllllllll are they smoking,,,,,lol,,,,,,
Oct 19, 2012 1:34PM
avatar
Rich, if you base the state of our country totally on the market, then you are a fool. The market is up now, and the economy still SUCKS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
The economy as a whole was WAY BETTER when Bush left office, regardless of the market.
Oct 19, 2012 1:12PM
avatar
Every time a company starts laying their employees off or cut expenses needed to run a more competitive business, it's a good sign of incompetence at the highest levels. It's not "re-structuring"  its simply "buying time"  until the books look better for share holders ! its that simple and the cycle continues.... 
Oct 19, 2012 12:47PM
avatar
Wall Street was looking for awhile for any excuse to take gains away from investors. Todays events are not worth over 10 points difference in any market day news. This is why they invented manipulation!!
Oct 19, 2012 1:11PM
avatar
once again, people are reading way too much into the daily stock market. The daily results whether up or down have little to do with actual the status of the economy. Trends on the other hand balance out the blips and tell a truer story. The on-going trend is the economy is slowly recovering. However there are so many political, social, and economic strains on the worldwide economy that I am afraid there are no quick fixes and by quick I mean in less than 10 years but that is only if we seriously start now.
Oct 19, 2012 1:23PM
avatar
Of course, when we finally get some improved volume, the bottom drops out.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min
Sponsored by:

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM]

  • June gold traded in positive territory for most of today's pit session. Prices advanced as high as $1307.10 per ounce and dipped to a session low of $1297.90 per ounce in mid-morning action. The yellow metal eventually settled with a 0.3% gain at $1303.40 per ounce. 
  • May silver rose to a session high of $19.81 per ounce shortly after floor trade opened. It then chopped around near the $19.60 per ounce level and settled with a 0.8% gain at $19.64 per ... More


Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Sponsored by:

VIDEO ON MSN MONEY