Stocks struggle on energy, tech weakness

The Dow sees a 60-point gain fade to just 12 points, despite hopes a solution for Europe's debt crisis is coming into focus. FedEx shares are lower on a profit warning. Dollar General boosts guidance. Crude oil recovers early losses.

By Charley Blaine Sep 5, 2012 12:35PM
Charley BlaineUpdated: 11:27 p.m. ET

Stocks finished basically unchanged today after an early, modest rally faded away ahead of Thursday's big meeting of the European Central Bank board.

The culprit may well have been profit-taking ahead of the meeting and ahead of a U.S. Labor Department report on jobless claims. Many investors have been hoping the ECB will act on a plan designed to bring the European debt crisis under control. But it now appears the plan that ECB President Mario Draghi has been developing may not be as strong as hoped.

The selling also was the result of a profit warning from FedEx (FDX) and disappointing economic data around the world. FedEx was off $1.74 to $85.80 after warning late Tuesday that fiscal-first-quarter results would be weaker than expected. Shares of rival United Parcel Service (UPS) were down $1.76 to $71.94.

Facebook
(FB) offered some cheer after CEO Mark Zuckerberg said he would not sell any shares for at least a year. The move by the company's founder and controlling shareholder was seen as a bid to stabilize the company's stock price. The stock was up 85 cents to $18.58 after falling to a new intraday low of $17.55 on Tuesday. The shares are off 51% from their initial public offering price of $38 a share.

The Dow Jones industrials ($INDU) closed up 12 points to 13,047. The blue chips had been up as many as 60 points. The Standard & Poor's 500 Index ($INX) was down 1.5 points to 1,403, and the Nasdaq Composite Index ($COMPX) dropped 6 points to 3,069.

Article continues below.
The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, was off 5 points lower at 2,767. Apple (AAPL), the largest influence on the index, was off $4.74 to $670.23.

Technology, industrial and energy stocks were the market's weak links.

Futures trading suggests a flat open for stocks on Thursday. But that may change first, when the ECB decision comes out from the bank's headquarters in Frankfurt, Germany, at 2:30 p.m. ET, 8:30 a.m. ET. The Labor Department's jobless claims report comes out at the same time. (An earlier version of this post incorrectly stated the time of the ECB decision.)

Oil makes a comeback
Oil prices weakened after a Markit Economics report today showed manufacturing weakening in the 17-nation eurozone faster than thought. Markit also reported that manufacturing in China is also falling back.

But prices recovered ahead of the ECB meeting on Thursday. Crude oil (-CL) in New York settled up 6 cents to $95.36 a barrel. It had traded as low as $94.26.

Gold (-GC) was off $2 to $1,694 an ounce. Silver (-SI) dropped 8.6 cents to $33.325 an ounce. Copper (-HG) moved to 6 cents to $3.53 a pound.

Interest rates were little changed. The 10-year Treasury yield moved up to 1.594% from Tuesday's 1.581%. The dollar was off slightly from major currencies.

What the ECB may do
The ECB is expected to unveil -- with broad support from its council members -- an unlimited, sterilized program of bond purchases.

Bloomberg reported that Draghi's plan would involve unlimited buying of government bonds. The ECB has been expected to be cautious about disclosing the size of its bond-buying, given opposition from Germany's central bank.


To sterilize the bond purchases, the ECB will remove from the system elsewhere the same amount of money it spends, Bloomberg News said. That would ensure the program has a neutral impact on eurozone's money supply. 


That's a problem, many economists say. Europe needs to expand credit to spur new economic activity. The plan doesn't make more credit available. 


One more issue: The plan goes nowhere if the German Constitutional Court rules the country can't participate.


Energy prices -- New York close



Wed.     Tues.

Month chg.

YTD chg.
Crude oil (-CL)

$95.36

$95.30

-1.15%

-3.51%
(per barrel)











Heating oil (-HO)

$3.1176

$3.1468

-1.97%

6.98%
(per gallon)











Natural gas (-NG)

$2.7950

$2.8540

-0.14%

-6.49%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.9498

$2.9522

-0.77%

11.00%
(per gallon)











Brent crude 

$113.09

$114.18

-1.29%

5.32%
(per barrel)











Retail gasoline

$3.8240

$3.8240

-0.13%

16.73%
(per gallon; AAA)












FedEx sees the global slowdown firsthand

FedEx, a barometer for the economy because it delivers goods ranging from mobile phones and electronic components to pharmaceuticals, slid after projecting its first decline in quarterly earnings in almost three years.

The company said it expects first-quarter earnings of $1.37 to $1.43 a share, down from earlier guidance of $1.45 to $1.60. The company said "weakness in the global economy constrained revenue growth at FedEx Express more than expected in the earlier guidance."

Productivity gains
The FedEx disappointment was offset by a government report showing that U.S. companies got more output from their workers this spring than initially thought.

Productivity rose at a modest 2.2% annual rate in the April-June quarter, largely because employers cut back sharply on hiring.

Most economists expect productivity will slow later this year, a trend that could boost hiring.

Nokia shares tumble despite new phones
Wall Street thinks Nokia (NOK) made a huge mistake when it announced two new phones today.

The company wouldn't say when the devices would be available to buyers. That information will come next month at the earliest.

Chief Executive Stephen Elop unveiled the flagship Lumia 920 and the mid-tier Lumia 820 at a press event in New York. Both devices use the Windows Phone 8 operating system from Microsoft (MSFT), work on high-speed fourth-generation networks and feature Nokia's advanced mapping and location services. (Microsoft is the publisher of MSN Money.)

But when the company wouldn't say when the phones would be out, the shares plunged and closed down 45 cents to $2.38 in New York.

Timing and wide distribution in time for the holiday shopping season are the key issues. The devices will be going up against Apple's new iPhone, expected to be introduced next week, and new devices powered by Google's (GOOG) Android operating system. Google's Motorola subsidiary introduced three new Droid models today. They will be available for the holidays.

If the Nokia phones are as late to the market as analysts think, it may be too late.

Microsoft was unchanged $30.39.

Winners on the day
Dollar General (DG) advanced 40 cents to $51.06 after the deep-discount retailer reported better-than-expected fiscal-second-quarter earnings. It also bumped up its full-year earnings and same-store sales guidance and added $500 million to its stock repurchase program.

Safeway
(SWY) jumped 68 cents to $16.50 after the supermarket operator said it would spin off its gift-cards subsidiary through an initial public offering.

Guidewire Software (GWRE) climbed $2.90 to $32.25 after the supplier of system software to property and casualty insurers announced fiscal-fourth-quarter earnings and revenue that easily beat analyst estimates.

Meanwhile, eighteen of the 30 Dow stocks were higher, led by Walt Disney (DIS), Boeing (BA) and IBM (IBM). American Express (AXP), Chevron (CVX) and United Technologies (UTX) were the laggards.

And 196 S&P 500 stocks showed gains, led by Sealed Air (SEE), for-profit education company Devry (DV) and Safeway. The laggards were cabinet-maker Masco (MAS), chip-maker Advanced Micro Devices (AMD) and Monster Beverage (MNST). 

Forty-four Nasdaq-100 stocks saw gains, led by Adobe Systems (ADBE) and for-profit college operator Apollo Group (APOL). Monster Beverage and Fastenal (FAST) were the laggards.

Short hits from the markets -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.1000%

0.100%

11.11%

900.00%
5-year Treasury note 

0.620%

0.622%

4.03%

-25.30%
10-year Treasury note

1.594%

1.581%

2.05%

-14.80%
30-year Treasury bond

2.705%

2.689%

0.78%

-6.37%
Currencies











U.S. Dollar Index

81.235

81.316

0.02%

0.89%
British pound

1.5911

1.5881

0.14%

2.40%
(in U.S. $)

 








U.S. $ in pounds

£0.629

£0.630

-0.14%

-2.35%
Euro in dollars

$1.26

$1.26

0.01%

-2.77%
(in U.S. $)

 








U.S. $ in euros

€ 0.794

€ 0.795

-0.01%

2.85%
U.S. $ in yen 

78.55

78.43

0.08%

1.89%
U.S. $ in Chinese

6.37

6.34

0.11%

0.71%
yuan











Canada dollar

$1.010

$1.015

-0.43%

2.94%
(in U.S. $)

 








U.S. dollar 

$0.991

$0.986

0.44%

-2.85%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,694.00

$1,696.00

0.38%

8.12%
(per troy ounce)

 








Copper (-HG)

$3.529

$3.469

2.08%

2.71%
(per pound)

 








Silver (-SI)

$32.329

$32.4110

2.82%

15.81%
(per troy ounce)

 








Wheat (-ZW)

$8.6775

$8.8875

-2.45%

32.94%
(per bushel)

 








Corn (-ZC)

$7.9075

$8.050

-1.13%

22.31%
(per bushel)

 








Cotton 

$0.7535

0.7568

-2.47%

-17.81%
(per pound)

 








Coffee

$1.6060

1.653

-2.52%

-30.07%
(per pound)

 








Crude oil (-CL)

$95.36

$95.30

-1.15%

-3.51%
(per barrel)










 

281Comments
Sep 5, 2012 2:51PM
avatar
CHARLOTTE -- President Obama's campaign is distancing itself from a Democratic convention video in which a speaker says "government is the only thing that we all belong to." 


At least they finally admit what we knew all along. They think we all work for them. 
Sep 5, 2012 3:56PM
avatar
As a small business owner, I am sick of both sides. I am listening to the convention speeches and there isn't much substance from either side. Sure lots of flowery ideas, and rhetoric, low on specifics. My taxes will most likely not change of any significance no matter who gets in office. I pay tax on profits and my inventory. There is all of this concern for gay marriage and medicare. The taxation of the rich. How will any of this affect the majority of Americans right now or in the next year or two? What can either side do for the betterment of the American people?
Sep 5, 2012 2:57PM
avatar

Washington Examiner - September 5th, 2012 -


If you thought the nation's 8.3 percent unemployment rate and $1.3 trillion budget deficit were the top two issues of the 2012 election, then congratulations, you share the same priorities as the vast majority of Americans. Also, that means you are probably not one of the Democrats in Charlotte, N.C., who have been drafting the Democratic Party's 2012 national platform.

The platform mentions abortion more times (four) than unemployment (three). It mentions "gay"/"LGBT" more times (six) than debt (five). It also mentions four times that President Obama killed Osama bin Laden.

Sep 5, 2012 3:45PM
avatar
v l

how about the do nothing senate under Reid
Sep 5, 2012 3:02PM
avatar

Forbes.com September 5th, 2012


For someone dealing with the world’s weightiest matters, Mr. Obama spends surprising energy perfecting even less consequential pursuits. He has played golf 104 times since becoming president, according to Mark Knoller of  News, who monitors his outings, and he asks superior players for tips that have helped lower his scores. He decompresses with card games on , but players who do not concentrate risk a reprimand (“You’re not playing, you’re just gambling,” he once told Arun Chaudhary, his former videographer).

His idea of birthday relaxation is competing in an Olympic-style athletic tournament with friends, keeping close score. The 2009 version ended with a bowling event. Guess who won, despite his history of embarrassingly low scores? The president, it turned out, had been practicing in the White House alley.

Sep 5, 2012 2:38PM
avatar
White House - Yes, we know that we wasted a large portion of the stimulus by paying off unions and my supporters with under the table pay outs. IF you give me another chance I'll do better. I promise. You know.....hope and change and all that stuff...ya'll remember. 

oh yeah....Bush....put you in chains.....they hate everyone. yada yada yada....
Sep 5, 2012 2:46PM
avatar
Sharing the wealth is libtardese for "we want to buy your vote."
Sep 5, 2012 1:28PM
avatar
Face Book up! 5%, but still down over 50%. 
Just like the last 4 years...

Just talk about the up 5%, that will work....
Sep 5, 2012 1:23PM
avatar
So the ECB plan is to rob Peter to pay Paul?  That should solve everything.
Sep 5, 2012 2:48PM
avatar
Does the US gov't even make the interest payment on this debt or do they just let it ride? 
avatar

FREE MONIES trump really bad economic news.

 

But wait the fact that the only way out of Europe's trouble is to print fake monies and buy up worthless bonds with worthless monies should be scaring the heck out of people.

 

I guess the financial people just see FREE MONIES and think everything is coming up roses.

 

I am sure Germany during the Great Depression thought printing FREE MONIES was a great thing also.

 

Pretty much some time sooner rather than later we are going to have the mother of all crashes.

 

But in the meantime there is

 

FREE MONIES FOR THE SUPER RICH folks but none for the common person.

 

Yep this is not going to end well at all folks.

 

Sep 5, 2012 3:45PM
avatar

"Bloomberg reported that Draghi's plan would involve unlimited buying of government bonds."

 

Let's dump US bonds on Europe, so when we default we can call it even for the two World Wars and the cost of the cold war.

Sep 5, 2012 2:51PM
avatar
"Do I have this right ? - Wall Street wants the economy to get WORSE"

Pretty shallow comment. Wall Street knows we are on the wrong path. That's why we need to get rid of them. When the greatest nation on Earth can be scuttled by druggies and kool Aid drinkers. it's time to close that door. Banks got their Gramm Leach Bliley Act and abused us. Close the banks, reconcile and let's fill some cells at GITMO with manipulators. As for the Federal Reserve, where were you when Dubya redesigned the Dollar and built bigger presses? Like anyone doesn't think this was planned and financiers won't fry for all the folly. Last chance losers... redirect that capital to recover jobs, eliminate hired-in executives and restore tangibility to American businesses. Anything but, is treason.
avatar

Oh no the ECB is going to rob normal people's bank accounts in order to buy the bonds where else are they going to find the money???

 

QUOTE

To sterilize the bond purchases, the ECB will remove from the system elsewhere the same amount of money it spends, Bloomberg News said. That would ensure the program has a neutral impact on eurozone's money supply.

END QUOTE

 

ROFL -- and they think people are going to believe they just found monies laying around doing nothing???

 

Just where are they hiding trillions of euros that they are going to use for this magic act???

 

these guys are a joke they are merely going to print more euros and buy up the worthless bonds.

 

Perhaps they think they are gods now and can make monies appear out of thin air.

avatar

Hope for European or US or Japan debt crisis???

 

ROFL

 

there are no jobs in the world that can put 40,000,000 Americans 50,000,000 Europeans and 20,000,000 Japanese back to work at $100,000 a year in order for them to survive the high cost of living in these failed economic blocks.

 

there are no piles of trillions of dollars or yen or euros sitting out there that will magically pay off these debts and make things right.

 

there is no way the failed economies of these countries can ever pay off their debt. It just will not happen.

 

The crash is coming sooner rather than later folks.

Sep 5, 2012 2:25PM
avatar
Bush blame gamers should google;

housing-bubble-financial-crisis-detailed-comprehensive-assessment
Sep 5, 2012 2:43PM
avatar
Do I have this right ? - Wall Street wants the economy to get WORSE so B.B. and the fed will hand out more worthless money.If that's true,that pretty much sums up the fed,wall street and the government.
Sep 5, 2012 2:53PM
avatar
BTW... are people in America aware that at least 4 European nations revived their old currency and use it now in lieu of the debased Euro? That pretty much tells you that they aren't going to make make good on your debt instruments. Sub-economies are thriving now. You're screwed. 
Sep 5, 2012 3:25PM
avatar

You write:

...Many investors have been hoping the ECB will act on a plan designed bring the European debt crisis under control...


I say:

"Oh baby, I done heard this stuff before
Baby, baby, I done heard this stuff before (you know I have)"


Johnny Winter, "Mad Blues"

Sep 5, 2012 2:49PM
avatar
PCD SAYS: the ECB is going to purchase bonds and says it will STERILIZE the purchase which means they will take monies from somewhere else another source to implement said STERILIZATION,if i had money in any bank in the ECB system i could not withdraw it fast enough can you say RUN ON BANK'S.people of EUROPE do you hear that flushing sound,that is your money getting STERILIZED,just sayin.=)
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