Dow off 23 in late selling; gold rises

Updated at 7 p.m. ET

 

Stocks pulled back modestly this afternoon on weakness in technology, financial and chemical stocks. Gold, however, closed at a new high.

The slide came a day before the end of September and the third quarter and suggests that the rally that erupted just before Labor Day may be peaking.

The Dow Jones industrials ($INDU) fell 23 points to 10,835. The decline came on a seesaw day that saw the blue chips' loss twice reach as many as 60 points.

The Standard & Poor's 500 Index ($INX) was off 3 points to 1,145.  The Nasdaq Composite Index ($COMPX) was down 3 points to 2,377.

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September ends on Thursday with the Dow and the S&P 500 up 8% and 9.5%, respectively, for the month and poised for their best September performances since 1939.  The Nasdaq is up 12.2%, potentially its best September since 1998.

There were some big moves today, including:

• American Greetings (AM), down 9.2% to $18.76. The greeting-card company's second-quarter earnings of 29 cents a share missed the consensus estimate of 38 cents. Revenue of $342.8 million also missed the Street estimate of $357 million.
• Keithley Instruments (KEI), up 73.1% to $21.45. The maker of electronic instruments used by researchers will be bought by Danaher (DHR) for about $300 million, or $21.60 a share.
• Sealy (ZZ), down 11.5% to $2.46. The bedding manufacturer reported third-quarter sales of $346.2 million, missing the consensus Street estimate by nearly 5%.
• Thor Industries (THO), up 13.7% to $32.95. The recreational-vehicle maker posted fourth-quarter profit, excluding one-time items, of 71 cents a share. The consensus estimate had been  62 cents.
• Hewlett-Packard (HPQ), up 2.2% to $42.53, second-best among the 30 Dow stocks. HP expects 2011 earnings,  excluding costs, of $5.05 to $5.15 a share on sales of $131.5 billion to $133.5 billion. Wall Street has been projecting sales of $131.7 billion and earnings of $5.01 a share.

What might have triggered the selling was that the S&P 500 failed three times during the day to move above 1,148, its close on Friday. The third failure set off some furious selling.

A second trigger was a rebound of the dollar from its lows on the day. The U.S. Dollar Index, which measures the greenback against six currencies, dropped to as low as 78.825 before rebounding a bit to 78.905 at the close. That little rebound was one reason for the late-day selling because U.S. multinational stocks tend to fall as the dollar rises.

But as has often happened in September, bears who believe stocks should be significantly lower could not get the rest of the market to buy in, and the losses were trimmed in the last 20 minutes of trading.

Bank of America (BAC) dropped more than 1% right after the open to $13.13, then recovered nearly all of that decline by noon ET. But the shares closed down 1.2% to $13.11.

Bank of America's recovery may have been in reaction to news that the government is planning to sell some of its $2.2 billion in trust preferred securities in Citigroup (C). The Treasury had already sold some of its common stock in the banking giant. But Citi, which had been up as much as 2.8%, faded to a 1% gain at $3.92.

The rebound off the lows comes on some relatively bad news.

The most disconcerting was that the year's largest initial public offering -- from Liberty Mutual -- was pulled today. The company blamed "the stalled economic recovery, volatile stock market and undervalued property and casualty insurance stock prices."

Video-game stocks were lower after Nintendo (NTDOY) warned that sales for its 2011 fiscal year, which ends March 31, will be 21% lower than expected. Profits are projected to fall 55% from its original projection. A big problem appears to be competition from smart-phone applications.

In addition, Nintendo said its new 3D hand-held gaming console would not come out in Japan until February.

Nintendo shares were off 9% to $32.80 in New York. Electronic Arts (ERTS) was off 1.9% to $16.23.

Jobless claims and Chicago PMI on tap
Thursday brings two important economic reports: the weekly report on jobless claims and the monthly Chicago Purchasing Managers Index report, which tracks trends in Midwest manufacturing.

Look for new jobless claims to come in around 460,000, down slightly from last week's 465,000.

The purchasing managers index is expected to come in at 56, down slightly from August. That would a signal of continued but cooling growth.

Energy prices -- New York close
			Wed.			Tues.			Month chg.			YTD chg.
Crude oil			$77.86			$76.18			8.26%			-1.89%
(per barrel)
Heating oil			$2.1905			$2.1245			9.98%			3.54%
(per gallon)
Natural gas			$3.9620			$3.9510			3.83%			-28.89%
(per mil. BTU)
Unleaded gasoline			$1.9955			$1.9479			7.44%			-2.80%
(per gallon)
Retail gasoline			$2.6920			$2.6910			0.56%			2.01%
(per gallon; AAA)

Gold and oil move higher
Gold, meanwhile, hit a new closing high of $1,310.30 an ounce, up $2. Gold hit a new intraday high as well: $1,314.80. Silver settled up 24.5 cents to $21.952 an ounce.

Crude oil settled up $1.68 to $77.86 a barrel after the Energy Department reported a surprising decline in domestic oil and gasoline supplies and as the dollar moved lower. Oil-and-gas and oil-service stocks were mostly higher.

Interest rates were lower, with the 10-year Treasury yield falling to 2.494% from 2.456% on Tuesday. 

A BP shakeup; AIG works on plan to repay US
Senior management at BP (BP) got a shakeup ahead of Bob Dudley's start as chief executive. Mark Bly will head BP's new safety division, and Andy Inglish will return to his role as head of the company's upstream business. BP's American depositary receipts rose 1.8% to $40.

 

American International Group (AIG) is finalizing a plan to accelerate repaying taxpayers and reduce the government's majority ownership in the insurance company, The Wall Street Journal reported. AIG shares were up 0.4% to $37.45.

Shares of Morgan Stanley (MS) were down slightly to $24.48 after Goldman Sachs (GS) cut its third-quarter outlook for Morgan Stanley, saying light trading activity is likely to weigh on profits.

 

Family Dollar Stores (FDO), one of the top-performing stocks this year, said its fiscal-fourth-quarter profit was 56 cents a share, beating the 51-cent consensus estimate. Shares rose  1.6% to $44.05.

 

Borders (BGP) plans to introduce an electronic reader called the Kobo 2, a wireless device that will cost $139. Borders' shares were up 2.5% to $1.25.

Only seven of the 30 Dow stocks were ahead on the day, led by Boeing (BA), up 2.3% to $65.97 after winning a $5.3 billion for new Navy jets.

Only 45 of the stocks in the Nasdaq-100 Index ($NDX.X) were higher, led by flash-chip maker SanDisk (SNDK), up 4.6% to $37.64.  The index finished down 3 points to 2009.

Material from The Street.com was incorporated into this post.

Short hits from the markets -- New York close
			Wed.			Tues.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.155%			0.150%			14.81%			210.00%
5-year Treasury note			1.287%			1.225%			-4.10%			-52.08%
10-year Treasury note			2.506%			2.456%			1.17%			-34.79%
30-year Treasury bond			3.691%			3.648%			4.47%			-20.47%
Currencies
U.S. Dollar Index			78.905			79.212			-4.92%			0.88%
British pound			$1.5798			$1.5813			2.91%			-2.34%
(in U.S. $)
U.S. $ in pounds			£0.6330			£0.6324			-2.82%			2.39%
Euro in dollars			$1.3637			$1.3591			7.55%			-4.85%
(in U.S. $)
U.S. $ in euros			€ 0.7333			€ 0.7358			-7.02%			5.10%
U.S. $ in yen			83.82			83.80			-0.34%			-9.87%
U.S. $ in Chinese			6.71			6.69			-1.41%			-1.68%
yuan
Canada dollar			$0.968			$0.971			3.20%			1.83%
(in U.S. $)
U.S. dollar			$1.033			$1.030			-3.09%			-1.80%
(in Canadian $)
Commodities
Gold			$1,310.30			$1,308.30			4.80%			19.53%
(per troy ounce)
Copper			$3.6605			$3.6370			8.94%			9.41%
(per pound)
Silver			$21.9520			$21.7070			13.17%			30.32%
(per troy ounce)
Wheat			$6.8350			$6.8475			4.75%			26.22%
(per bushel)
Corn			$5.0500			$5.0000			18.96%			21.83%
(per bushel)
Crude oil			$77.86			$76.18			8.26%			-1.89%
(per barrel)