Tech stocks, global worries pull market down
The Dow falls 110 points. The Nasdaq slumps for a 3rd day. Earnings boost Yum Brands shares after hours; Alcoa drifts. Apple weighs on techs again. A downgrade hits Intel; Cummins trims its revenue guidance. Oil rises on more Middle East tensions.
By Charley Blaine Oct 9, 2012 12:21PM
Updated: 8:10 p.m. ETTechnology shares pulled stocks lower again today in a market already worried about global growth and the third-quarter earnings season.
Apple (AAPL) was one of the biggest causes of the market's decline, and shares ended lower after briefly rebounding into the black. IBM (IBM), Amazon.com (AMZN), Intel (INTC), MSN Money publisher Microsoft (MSFT), Google (GOOG) and Oracle (ORCL) were lower as well.
After the close, shares of Yum Brands (YUM), best known for its KFC and Taco Bell businesses, were up $2.61, or 4%, to $68.65 as earnings were better than expected. But shares of Alcoa (AA) have given up their after-hours gains and were off a penny from the regular close of $9.13.
The market may be pressured Wednesday after engine-maker Cummins (CMI) cut its full-year revenue guidance and profit guidance. It expects to reduce its work force by 1,000 to 1,500. The company blamed the global slowdown. North American heavy-truck and international power generation business is especially weak. So is China. Shares were off $3.83 to $87.01 after hours.
The Dow Jones industrials ($INDU) fell 110 points to 13,474, finishing just above their low on the day. The Standard & Poor's 500 Index ($INX) slid 14 points to 1,441. The Nasdaq Composite Index ($COMPX) was off 47 points to 3,065, and the Nasdaq-100 Index ($NDX) tumbled 45 points to 2,742. The Nasdaq's loss was its worst one-day decline since June 25.
Article continues below.The market's fall came after the International Monetary Fund cut its global economic forecasts yet again, calling the risks of a slowdown "alarmingly high," primarily because of policy uncertainty in the United States and Europe.
Stocks may open lower on Wednesday. Costco Wholesale (COST) will report quarterly results. In the afternoon, the Federal Reserve will release its Beige Book report, a narrative look at the economy.
Cummins' warning will weigh on the market. Caterpillar (CAT) was off $1.27, or 1.5%, to $83.48 after hours on top of a decline of 69 cents to $84.75 in regular trading. Also moving lower: Deere (DE), Eaton (ETN), Illinois Tool Works (ITW), Navistar (NAV) and Paccar (PCAR).
A big report for Yum Brands
Yum Brands earned $1 a share, up from 80 cents a year ago, as revenue grew 9% to $3.57 billion.
Its China business, a key profit driver, saw operating profits rise 24% to $374 million. Revenue grew 24% to $1.99 billion.
The company raised its full-year guidance at least 13% to at least $3.24 a share.
Alcoa reported a loss of 13 cents a share from continuing operations under generally accepted accounting. Excluding one-time charges, the aluminum giant earned 3 cents a share. Revenue was $5.8 billion, down 7% from a year ago but ahead of Street estimates. Realized prices for its aluminum were down 17% from a year ago.
The loss from continuing operations included a settlement of an environment dispute with the Environmental Protection Agency and a lawsuit from the government of Bahrain over alleged bribery and other problems.
Strong results from sales to the aerospace, automotive and construction industries were also offset by weak prices in its mining and basic refining operations. The pricing weakness is the result of a slowing economy in China.
Dow and S&P 500 mark a 5-year anniversary
Today is the fifth anniversary of the all-time closing highs for the Dow and S&P 500.
The Dow finished at 14,64.53. The S&P 500 ended at 1,445.60. Both fell more than 54% between Oct. 9, 2007 and March 9, 2009. The Nasdaq, which peaked at 2,859.12 on Oct. 31, 2007, fell nearly 56%.
The market has recovered substantially. Despite today's sell-off, the Dow ended the day 4.9% below its Oct. 9, 2007. The S&P 500 was within 7.9% of its 1,445.60 close the same day.
The Nasdaq is trading 7.5% above its 2007 high. The index is still down 38% from its closing high of 4,963.03, set on March 24, 2000.
| Energy prices -- New York close (updated) | ||||||||||||
| Tues. | Mon. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $92.39 | $89.33 | 0.22% | -6.52% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $3.2032 | $3.1443 | 1.39% | 9.92% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $3.4670 | $3.4030 | 4.43% | 15.99% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $2.9587 | $2.8931 | 1.32% | 11.34% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $114.50 | $111.82 | 1.88% | 6.63% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.8150 | $3.8180 | 0.74% | 16.45% | ||||||||
| (per gallon; AAA) | ||||||||||||
A bad day for techs
Apple was down $2.32 to $635.85. The close was an improvement over the day's low of $623.55, but the shares are down 9.4% from their Sept. 21 peak.
The initial problem today was Nomura Securities analyst Stuart Jeffrey's giving the stock a "neutral" rating when he started coverage today. Translated out of Wall Street parlance, that's actually a negative signal.
He had concerns about supply constraints with the iPhone and the expected new iPad Mini tablet. He's also worried about sales growth.
Intel was off 61 cents to $21.90, just after it hit $21.85, a new 52-week low. Bernstein Research analyst Stacy Rasgon cut his rating on the stock to "underperform." He's worried about lower selling prices for chips in 2013.
Netflix (NFLX) was off $7.99 to $65.53. The Wall Street Journal said Bank of America/Merrill Lynch cut its rating on the stock to "underperform" from "buy." The stock had risen more than 30% in the last two weeks. The Journal noted Netflix is seen as a takeover candidate for Amazon.com (AMZN), which is in no rush to make the deal happen.
A bias to the downside
Nine of the 10 S&P 500 sectors were lower today, with technology the lagging sector. Energy was the leading sector.
Wells Fargo (WFC) was down 70 cents to $35.10 after the U.S. attorney in New York filed a civil mortgage fraud lawsuit against the nation's largest mortgage lender seeking hundreds of millions of dollars in damages over allegations of reckless underwriting and fraudulent loan certification. An investigation conducted with assistance from the Department of Housing and Urban Development found more than 6,000 Wells Fargo mortgage loans with material violations.
Only three Dow stocks were higher: McDonald's (MCD), up 57 cents to $92.11; Alcoa and Boeing (BA), up 7 cents to $70.64. Chevron (CVX) and Exxon Mobil (XOM) had been among the gainers for much of the day, thanks to higher oil prices. But they fell back to $117.36, down 26 cents, and $92.13, down 55 cents, respectively.
Eight-six S&P stocks were higher, led by mostly by energy stocks. Newfield Exploration (NFX) and coal-producer Peabody Energy (BTU) were the laggards.
Edwards Life Sciences (EW), maker of heart valves, was the laggard, followed by Netflix. Edwards shares fell $22.81 to $84.60 after disclosing that third-quarter sales were $448 million, lower than the expected $465 million to $485 million.
Owens-Corning (OC) shares fell $2.83 to $31.12 after reporting that weakness in its roofing business persisted in its fiscal-third-quarter. It expects $2 billion in revenue for the full year; Wall Street was looking for $2.15 billion.
Meanwhile, just three Nasdaq-100 stocks were higher. Green Mountain Coffee Roasters (GMCR) was up 30 cents to $22.83. Sears Holdings (SHLD), which is spinning off its Sears Hometown and Outlet stores into a new company, added 32 cents to $58.90. Game-maker Electronic Arts (EA) was up 3 cents to $13.01. Netflix was the laggard.
Gold (-GC) settled down $10.70 to $1,765.10 an ounce. Crude oil (-CL) in New York settled up $3.06 to $92.39 a barrel. Brent crude, the benchmark North Sea crude, was up $2.38 to $114.20.
Oil prices moved higher on increasing tensions in the Middle East and the concern that a global economic slowdown will curb demand. Turkey sent more tanks and missile defense systems to the Syrian border yesterday.
The national average price of gasoline was at $3.815 a gallon, according to AAA's Daily Fuel Gauge Report. That was down slightly from Monday's $3.818, but up 16.5% for the year.
| Short hits from the markets -- New York close (updated) | ||||||||||||
| Tues. | Mon. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.1000% | 0.100% | 11.11% | 900.00% | ||||||||
| 5-year Treasury note | 0.663% | 0.676% | 5.24% | -20.12% | ||||||||
| 10-year Treasury note | 1.720% | 1.746% | 5.07% | -8.07% | ||||||||
| 30-year Treasury bond | 3.032% | 3.032% | 0.00% | 4.95% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 80.069 | 79.622 | 0.05% | -0.56% | ||||||||
| British pound | 1.6018 | 1.6028 | -0.88% | 3.09% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.624 | £0.624 | 0.89% | -3.00% | ||||||||
| Euro in dollars | $1.29 | $1.30 | 0.56% | -0.25% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.774 | € 0.771 | -0.55% | 0.25% | ||||||||
| U.S. $ in yen | 78.49 | 78.31 | 0.67% | 1.81% | ||||||||
| U.S. $ in Chinese | 6.31 | 6.28 | 0.48% | -0.23% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $1.025 | $1.024 | 0.77% | 4.43% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $0.977 | $0.977 | -0.69% | -4.25% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,765.00 | $1,775.70 | -0.50% | 12.65% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $3.718 | $3.718 | -1.06% | 8.21% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $33.9850 | $34.0170 | -1.71% | 21.74% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $8.6425 | $8.6100 | -4.24% | 32.40% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $7.420 | $7.420 | -1.88% | 14.77% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $0.7184 | $0.7178 | 1.68% | -21.64% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $1.6530 | $1.691 | -4.73% | -28.02% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $92.39 | $89.33 | 0.22% | -6.52% | ||||||||
| (per barrel) | ||||||||||||
383Comments
Oct 9, 2012 12:43PM
Oct 9, 2012 12:49PM
Here we go again with the same ole BS about the oil prices. It's been a while since they had an excuse so I guess they had to bring it up again. I guess this may not be a bad thing right now because if gas stays the way it is I know Obama won't be re-elected. They fudged the unemployment numbers but they can't fudge the gas prices because we have the proof in front of us.
Oct 9, 2012 1:16PM
It's amazing that with unemployment SOOO LOW, and the economy doing SOOO WELL, that these companies are doing so poorly that it's bringing the market down.
Could it be that people are waking up to the sad fact that the unemployment numbers just don't jive with the real state of the economy?
Oct 9, 2012 1:11PM
People need to educate themselves as to what's really going on in the world, our government, banks and wall street. They are all working together to transfer all of the worlds wealth to a few who want total world control and power.
Our government, who used to be "for the people" has been taken over by the worst group of criminal terrorists in the history of the world.
The American people need to wake up and realize what's going on. Obama doesn't work for anyone but wall street and the global banks. He says one thing and does the opposite. That's been proven over and over again. Look at all of the people he surrounds himself with... The very pepole who caused the collapse of 2008 are ALL working directly for him now.
Neither Democrat or Republican have any intention of helping anyone but the same masters who control both sides of the isle, and will stop at nothing to get total world domination and control.
The American people are going to have to take back government to work for the peole again or America is done forever...
Oct 9, 2012 1:36PM
Oct 9, 2012 1:06PM
The market will rebound nicely after November 6. Future looks good under Mitt Romney/ Paul Ryan. On the other hand should Obama win, I can see $10.00 gas, more unemployment, lower revenue for companies as well as lower profits, confusion on foreign policy could lead to wars. Don't take a chance vote Romney/Ryan.
Oct 9, 2012 1:19PM
Well...It is just like I posted the other day..........."the truth always comes out"! The American people have and are not hearing the truth about the economy. For weeks now, we have had article after article from the media trying to get us to re-elect Obama. It is now obvious that what Obama's polocies have done is aid the wealthy. He contends that he is for the poor, however, everything points the opposite. I will be voting for Romney. I do believe that Romney is much more honest and loves America! If Obama is re-elected, the United StATES I believe will lose big time!
Oct 9, 2012 1:46PM
Oil up 2.75 on middle east tensions ?? Is that the tensions from 1,00 years ago or the tensions from 10 years ago or the tensions from yesterday ??What a big fat bunch of crap.No wonder families can't make and stick to a budget,theses sorry sacks won't leave things alone.Gas stations can't come down on prises 'cause these *^#@! just jack oil back up.PATHETIC ! !
Oct 9, 2012 3:28PM
Anyone believing that income redistribution works or ever worked doesn't know human nature.
The "poor" in this country are IN NO DANGER OF LIFE THREATENING TYPE RESULTS OF POVERTY BECAUSE THAT "POVERTY LINE" IS CONSTANTLY INCLUDING MORE AND MORE AMENITIES THAT DO NOT HAVE ANYTHING TO DO WITH SUSTAINING LIFE!
A politicians nature is to try to BUY FOR HIMSELF ANOTHER'S' LOYALTY ...... WITH YET ANOTHER'S' MONEY.
A humans' nature is to get all he can with as little effort as he can expel and when offered more for free, take it ONLY TO NOW LOOK AT HIS NEIGHBORS' LIFE AND PROPERTY, WISHING TO HAVE THE THINGS THAT ARE NOT HANDED OUT AT THIS TIME.
This is never ending, which is why Buddhism is not common in the west .............. WHERE WANTING TO KEEP ALL THAT YOU EARN IS CALLED "GREED" AND WANTING TO TAKE WHAT OTHERS HAVE EARNED IS CONSIDERED "NEED"!
The "poor" in this country are IN NO DANGER OF LIFE THREATENING TYPE RESULTS OF POVERTY BECAUSE THAT "POVERTY LINE" IS CONSTANTLY INCLUDING MORE AND MORE AMENITIES THAT DO NOT HAVE ANYTHING TO DO WITH SUSTAINING LIFE!
A politicians nature is to try to BUY FOR HIMSELF ANOTHER'S' LOYALTY ...... WITH YET ANOTHER'S' MONEY.
A humans' nature is to get all he can with as little effort as he can expel and when offered more for free, take it ONLY TO NOW LOOK AT HIS NEIGHBORS' LIFE AND PROPERTY, WISHING TO HAVE THE THINGS THAT ARE NOT HANDED OUT AT THIS TIME.
This is never ending, which is why Buddhism is not common in the west .............. WHERE WANTING TO KEEP ALL THAT YOU EARN IS CALLED "GREED" AND WANTING TO TAKE WHAT OTHERS HAVE EARNED IS CONSIDERED "NEED"!
Oct 9, 2012 1:07PM
The in depth analysis of the unemployment data released by the Bureau of Labor Statistics indicated an inordinate increase of employment numbers in the sector classified as Home Based Businesses. Roughly a 5% increase in 1 month? Employment in other sectors remained in line with estimates showing some uptick in seasonal employment as expected and contraction in other sectors. The preposterous 1 month increase in home business start ups can be explained by a change in the way the employment data is being collected. Telephone Interviews of households by the BLS are one of the tools used to calculate the employment numbers. Questions are fielded to the person interviewed on employment status and sources of income. Now if the person interviewed indicates they have worked or done anything from their home to supplement their income, no matter how small the task, they are considered employed in a home based business. Even if you were paid a few dollars to cut your neighbors grass, walk their dog, or helped paint a room for a few bucks, you are employed. The public was conveniently no told of the changes and the BLS can say we didn't fudge the figures.
Oct 9, 2012 3:02PM
Oct 9, 2012 1:32PM
Oct 9, 2012 1:14PM
As I said ..... Romney is ahead in the polls .. every poll!
The economy is taking a dive ... that will be one more nail in Obama's coffin
Gas is at $5.00 in some areas ... bang in the last nail.
The country is bankrupt ... Obama has run up the debt more than any other Pres in history and his printing money like junkmail has devalued our dollar for the first time in history and folks are hesitant to loan us any money which leads us into BK just like Greece and Spain.
R+R in 2012 .... ahead in all polls, even the liberal trash like MSNBC!
Oct 9, 2012 1:09PM
Psych O ..... And I'm sure that any money you've saved to give to your family you'de like it to end up in the hands of the Gov't. As if we aren't taxed enough ... the Gov't under Obama wants to tax the money you have saved to go to the Gov't and not to your family! YIKES!
How old are you. 12?
Oct 9, 2012 1:21PM
Max said;
"Democrat Platform, Ask not what your Country can do for you ,but what can you do for your Country."
Seriously Max? That's what you call living off of entitlements? That's what you call Illegals getting free medical, food stamps, etc.
Don't you mean;
"Ask not what you can do for your country, but what honest people who actually work for a living, can do for freeloaders."
Oct 9, 2012 3:35PM
Oct 9, 2012 3:25PM
Oct 9, 2012 3:14PM
Oct 9, 2012 1:32PM
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