Dow off 129 as economic worries slam stocks
Investors are dismayed by weak outlooks from Chevron and Alcoa. Costco and Yum results cheer, and Wal-Mart cites strong back-to-school sales. 3rd-quarter PC sales slump. In a modestly improving economy, the Fed sees new housing activity.
By Charley Blaine Oct 10, 2012 12:41PM
Updated: 7:41 p.m. ETStocks tumbled again today as worries about weakening global and domestic growth combined to push energy, materials and industrial stocks lower. The pressures offset strong earnings from Yum Brands (YUM) and Costco Wholesale (COST).
The Dow Jones industrials ($INDU) suffered their third loss in a row and second straight loss of 100 points or more. The Standard & Poor's 500 Index ($INX) and the Nasdaq Composite Index ($COMPX) suffered their fourth straight losses.
Alcoa (AA) and Chevron (CVX) were the two worst performers among the 30 Dow stocks. Alcoa warned about weakness in global markets, especially in China. Chevron warned late Tuesday that slumping oil prices and production would cause earnings to be "substantially lower." It blamed Hurricane Isaac for disrupting production at a Mississippi refinery.
The Alcoa and Chevron warnings are part of a continuing theme of warnings centered around slowing global and domestic economic growth. Europe is staggering from the effects of its debt crisis. China is suffering from overbuilt housing and slowing export markets. The global and domestic pressures forced FedEx (FDX) to develop a plan, announced today, to cut expenses by $1.7 billion over the next three years. The savings will come through service adjustments, swapping old planes for new ones and a voluntary buyout plan.
The Dow finished down 129 points to 13,345; the blue chips had been down as many as 146 points. The S&P 500 was off 9 points to 1,433, and the Nasdaq dropped 13 points to 3,052. The Dow's loss was its third in a row; the S&P 500 and Nasdaq's declines were their fourth straight.
Article continues below.The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, was off 13 points to 2,729.
The Dow and S&P 500 are off about 2% since they started their losing streaks; the Nasdaq is off 3.1%. The Dow's 239-point decline in the last two days is its worst since June 21. The S&P 500 and Nasdaq suffered their worst two-day losses since July 23.
Apple (AAPL) was up $5.06 to $640.91 after rising to as high as $641.53. The shares had fallen for four straight days and lost 9.4% between their record close of $702.10 on Sept. 19 and Tuesday. A Piper Jaffray survey suggested that 40% of U.S. teens own an iPhone (up from 23% a year ago). Some 31% own an iPad.
PC sales tumble globally and in U.S.
After the close, electronics market research Gartner Inc. said that world-wide personal-computer shipments fell 8.3% to 87.5 million units in the third quarter from a year ago.
U.S. personal computer shipments fell 13.8% to 15.3 million units.
The decline was due in part to declining sales of computers to consumers, who are opting for tablet devices like Apple's iPad. In addition, customers are waiting for Microsoft's (MSFT) Windows 8 operating, due to be released later this fall.
Chinese manufacturer Lenovo became the biggest global seller of computers for the first time, with a 15.7% market share overtaking Hewlett-Packard (HPQ), which had a 15.5% market share.
HP is still the largest U.S. PC vendor, with a 27% market share, followed by Dell (DELL) (21.4%) and Apple (13.6%).
After the Gartner report was released, rival IDC said it believes Hewlett-Packard is still ahead of Lenovo. But it drew similar conclusions. Sales are down. The tablet has become an "it" product, and the industry is being affected by the global slowdown.
Crude sheds early gains; gold ends flat
Crude oil (-CL) in New York settled down $1.14 to $91.25 a barrel. It had been as high as $93.66, the highest price since Sept. 18, on worries that escalating tension in the Middle East will disrupt supplies. Brent crude slid 17 cents to $114.33.
The pullback was abrupt and appeared to be based on the fears of a global economic slowdown and the prospect that a report due on Thursday will show domestic supplies grew.
The national average price of gasoline was $3.813, down slightly from Tuesday's $3.815, according to AAA's Daily Fuel Gauge Report.
Gold (-GC), however, was down as much as $6.50 an ounce but recovered in the afternoon to settle at $1,765.10, up 10 cents. Silver (-SI) settled up 12.4 cents to $34.109 an ounce. Copper (-HG) was unchanged at $3.718 a pound.
Interest rates were mostly lower. The 10-year Treasury yield fell to 1.691% from Tuesday's 1.72%.
| Energy prices -- New York close (updated) | ||||||||||||
| Wed. | Tues. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $91.25 | $92.39 | -1.02% | -7.67% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $3.2131 | $3.2032 | 1.71% | 10.26% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $3.475 | $3.4670 | 4.67% | 16.26% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $2.9533 | $2.9587 | 1.34% | 11.36% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $114.33 | $114.50 | 2.18% | 6.95% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.8130 | $3.8150 | 0.69% | 16.39% | ||||||||
| (per gallon; AAA) | ||||||||||||
Fed sees economy growing modestly and recovery signs in housing
The Federal Reserve offered a modest but mostly optimistic narrative view of the economy this afternoon. Its Beige Book report, prepared by the 12 Federal Reserve banks, reported moderate growth across much of the country, with the New York and Kansas City regions showing signs of weakening.
There are some who thought the report showed some unease about the economy. In its July 18 report, for example, the Fed suggested the economy was expanding modestly to moderately.
The big surprise in today's report was its characterization of residential real estate: "Most districts reported strengthening in existing home sales while prices were described as steady to increasing." The report noted declining inventories in the Boston, Atlanta, Minneapolis, Dallas and San Francisco districts, along with increasing residential construction.
The jobs market was flat or up slightly. But hiring was being limited by uncertainty related to the upcoming presidential election, U.S. fiscal policy and European debt issues.
But there are increasing signs of shortages of highly skilled workers, the report said. Some companies were starting to increase training programs to meet their staffing needs.
Wall Street appeared to be neutral on the report at best. The Dow's loss was initially trimmed by as many as 20 points but then fell back.
Not many gains for stocks
Only four of the 30 Dow stocks were higher: Wal-Mart Stores (WMT), JPMorgan Chase (JPM), McDonald's (MCD) and Travelers Companies (TRV).
Meanwhile 115 S&P 500 stocks were higher, led by Yum Brands, FedEx and Edwards Life Sciences (EW).
Eighteen Nasdaq-100 stocks were higher, led by Sirius XM Radio (SIRI), Dollar Tree (DLTR) and Costco.
The bad news in the markets . . .
Six stocks contributed more than 94 points to the Dow's loss: Chevron, IBM (IBM), Caterpillar (CAT), United Technologies (UTX), Exxon Mobil (XOM) and Home Depot (HD).
Home Depot fell $1.21 to $59.74 after a downgrade by Oppenheimer analyst Brian Nagel. The issue was purely valuation. The shares are up 42% on the year and more than 109% from August 2011. The company should be a big winner as the housing recovery gains strength.
The other five were affected by the economic worries.
Alcoa, down 42 cents to $8.71, contributed less than 3 points to the Dow's decline.
Meanwhile, engine-maker Cummins (CMI) shares were down $3.05 to $87.9 after the company warned late Tuesday that global growth and a decline in U.S. truck sales would weigh on results.
Shares of Avnet (AVT), one of the biggest distributors of electronics parts, were off $1.24 to $27.33. The company said it expects fiscal-first-quarter sales of $5.85 billion. It had projected $5.8 billion to $6.4 billion.
Facebook (FB) shares fell to 59 cents to $19.64, the first time the shares have traded below $20 since Sept. 11. Research firm comScore estimated U.S. Facebook PC use fell 20% year over year in September, worse than August's 14% drop. This led Oppenheimer's Jason Helfstein to think estimates might be too high. A shift in activity to mobile devices is clearly one reason for declining PC use, but there's also some evidence younger Americans are just spending less time on Facebook in general.
MetroPCS (PCS) shares were off 47 cents to $12.04 after Bloomberg News reported that Sprint Nextel (S) has decided to hold off making a bid for MetroPCS. MetroPCS already has an agreement to merge with Deutsche Telekom's (DTEGY) T-Mobile, the fourth-largest U.S. cellphone operator. Sprint Nextel was up 9 cents to $5.04.
. . . and the good news
Wal-Mart offset that crummy news after saying it had enjoyed a "very strong" back-to-school season and will add U.S. stores. Shares hit an intraday high of $76.73 before dropping back to $75.42, up $1.28.
Costco also hit an all-time intraday high of $104.43 and closed at $101.56, up $1.92. The company reported a 27% increase in fiscal-fourth-quarter earnings, driven in part by higher membership fees. Revenue was up 22% to $32.2 billion. Earnings rose to $1.39 a share, up from $1.08 a year ago. Same-store sales rose 6% in the United States and 7% internationally.
Yum Brands, best known as the operator of Taco Bell and KFC, was up $5.28 to $70.99 after reporting solid results late Tuesday. The company allayed fears that the slowdown in China was affecting its large and growing business there.
| Short hits from the markets -- New York close (updated) | ||||||||||||
| Wed. | Tues. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.1000% | 0.100% | 11.11% | 900.00% | ||||||||
| 5-year Treasury note | 0.660% | 0.663% | 4.76% | -20.48% | ||||||||
| 10-year Treasury note | 1.691% | 1.720% | 3.30% | -9.62% | ||||||||
| 30-year Treasury bond | 3.032% | 3.032% | 0.00% | 4.95% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 80.017 | 80.069 | 0.01% | -0.63% | ||||||||
| British pound | 1.6018 | 1.6010 | -0.88% | 3.09% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.624 | £0.625 | 0.89% | -3.00% | ||||||||
| Euro in dollars | $1.29 | $1.29 | 0.37% | -0.43% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.775 | € 0.776 | -0.37% | 0.43% | ||||||||
| U.S. $ in yen | 78.31 | 78.26 | 0.43% | 1.57% | ||||||||
| U.S. $ in Chinese | 6.32 | 6.28 | 0.62% | -0.09% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $1.020 | $1.023 | 0.30% | 3.94% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $0.981 | $0.978 | -0.23% | -3.80% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,765.10 | $1,765.00 | -0.50% | 12.66% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $3.718 | $3.718 | -1.06% | 8.21% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $34.109 | $33.985 | -1.35% | 22.19% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $8.6975 | $8.6425 | -3.63% | 33.24% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $7.3675 | $7.42 | -2.58% | 13.96% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $0.7210 | $0.718 | 2.05% | -21.36% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $1.6345 | $1.653 | -5.79% | -28.83% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $91.25 | $92.39 | -1.02% | -7.67% | ||||||||
| (per barrel) | ||||||||||||
131Comments
Oct 10, 2012 2:57PM
Oct 10, 2012 8:36PM
"America needs very little from the federal government. Other than defense, almost all useful functions are performed at the state and local level anyway. Most fed employment is a repository for the bottom dwellers of competence."
It is always refreshing to read our Constitution, isn't it? National defense, protection of our borders, protection of the individual from THEM (the Feds), and a legal framework that allows and enables our individual State's to be in competition is, in fact, all that the "Feds" are ( Constitutionally speaking) "allowed".
How shamefully- approaching catastrophically- far we have "progressed" from our brilliant Founding Father's vision of this nation. And it may very well seal our demise.
Oct 10, 2012 1:12PM
When stock values trend up - its inflation adjustment.
When stocks trend down - it's economic malaise.
Maybe someday soon we can again believe that the market reflects the value of a business doing business and not cooking the books or pumping out fictitious press releases.
Of course, first we would have to believe in the integrity of government and Santa Claus again.
Oct 10, 2012 2:49PM
Bond asaid;
"Romney is pushing stk mkt lower, things were fine 6k to 14k till Romney lied at debate.
People are scared of Romney hood:"
Bond,
I'm pretty sure "Take from the rich, and give to the lazy" is Obama's bag.
Oct 10, 2012 4:46PM
Re-Tog, My only hope is that a change in the White House will slow the fall down the rat hole into deficit default. More wars won't stimulate any economy and we need to stop policing an uncooperative world. No matter what action either candidate takes in the future, our wealth is in jeopardy. Now it is , "Whats best for the grand kids?"
Oct 10, 2012 8:17PM
Oct 10, 2012 8:31PM
Oct 10, 2012 8:24PM
Oct 10, 2012 4:33PM
Oct 10, 2012 1:06PM
Oct 10, 2012 2:46PM
Oct 10, 2012 7:28PM
"What President was in charge when 4 times the amount of attacks on American embassy's occurred than under President Obama....."
Is this somehow a "plus", or even defense of... our current "Disaster in Chief"?
Jesus - didn't you get some education in addition to whatever public school that you attended? Maybe something in "logic" or "critical thinking"?
Oct 10, 2012 3:13PM
Oct 10, 2012 4:16PM
Oct 10, 2012 3:03PM
Romney has said if he is elected, he will fire Ben Bernanke and stop QE. That certainly sounds as if it could be a ticking time bomb for the fairly lofty market valuations we have right now. Some pros have speculated the Fed's QE since 2009 has been responsible for at least 30% of present market valuation.
Oct 10, 2012 2:52PM
Not really sure where to start....
A Market and a Company's FMV...And or a Value per share, "is" based on several indicators or Fundamentals of Sales, Earnings(profits) and Forward guidance; Along with Value of assets, dividends paid to shareholders and growth prospects...
It "is not" some willy-nilly price per share that Joe is willing to pay, so he can sell it to Tom for a profit later.
Although perceptions do come into play, and World events, including National events can or may effect a value for a short term period..Good Companies usually retain value, poorly managed usually don't.
Of course everyone is investing to make a profit...Not everyone does.
Oct 10, 2012 4:49PM
We warned about today this morning....The question was not if we were going to end lower, the question was how low were we going to end, they said they wanted to beat yesterday's low, they sure did....Manipulators telegraphed it this this morning when they slowly but surely took control of the floor....Manipulation at its finest, it wasn't Europe's fault today, or Asia's or oil, or anything else, just like yesterday....These crooks once again got away with it, made once again tons of money while most hard working Americans took another big hit...We are always asked, why doesn't the SEC do something about this overt cheating; simple, because the SEC is a totally worthless organization. Guess where most of those people want to work after they leave the SEC, you guessed it, and they do not want to bite the hand that will feed them eventually. Fricking crooks. Another thing, the talk down here is still the bogus unemployment number, this administration thinks they fooled the American people but they sure did not fool Wall Street, down every day since the famous 7.8 number came out, that is also part of the problem. Better believe that. Oh well, we will see if they will continue their cheating tomorrow.
Oct 10, 2012 4:37PM
ABS
Leaving early today....
Sounds to me like he can dish it but not take it, which is a surprise as taking it seems natural for him. Also as far as being a fake Canadian.... why is it that everyone on here can believe something that simple just not you? Do I need to dumb it down for you some more.... I am not from the same place as you. As far as being a fake poster, you have 11 times the posts I do. I have a little over 300 you have about 3300. So what's more likely I am faking being Canadian or you are faking being rich? Hmmmm.
Oct 10, 2012 9:23PM
Oct 10, 2012 4:43PM
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