Stocks shrug off manufacturing worries

The S&P 500 and Nasdaq show gains; the Dow falls slightly. Weakness in Europe is the biggest weight on the Institute for Supply Management's June manufacturing index. Barclay's CEO Bob Diamond quits.

By Charley Blaine Jul 2, 2012 12:47PM
Charley BlaineUpdated: 3:45 a.m. ET, Tuesday

Stocks started the third quarter mostly higher despite a disappointing report on U.S. manufacturing and continuing worries about Europe.

The Standard & Poor's 500 Index ($INX) and the Nasdaq Composite Index ($COMPX) finished higher, while the Dow Jones industrials ($INDU) suffered a small loss due to declines in shares of United Technologies (UTX), Boeing (BA), DuPont (DD) and Caterpillar (CAT), all of which are vulnerable to global economic forces.

Futures trading suggests a flat open for stocks in the United States. Stocks in Asia and Europe were modestly higher.

British traders were stunned on Tuesday in London when Robert Diamond, the American-born CEO of Barclay's (BCS), resigned in the wake of a what The Wall Street Journal called "an intensifying interbank-lending rates scandal." On Monday, Chairman Marcus Agius had quit, but he has returned as chairman and Barclay's, Britain's largest banking company, is now looking for a new CEO.  

The Dow closed down 9 points to 12,871; the blue chips had been down as many as 85 points. The Standard & Poor's 500 Index ($INX) was up 3 points to 1,366, and the Nasdaq Composite Index ($COMPX) was up 16 points to 2,951.

Article continues below.
The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, gained 9 points to  2,625. Apple (AAPL), the biggest influence on the index, was up $8.52 to $592.52, adding 7 points to the index.

A banking scandal claims a big victim
Diamond's resignation from Barclay's came as the British government announced a series of inquiries into ethical standards in the banking industry and as the U.K. Serious Fraud Office said it was considering criminal prosecutions against those who allegedly attempted to rig interbank lending rates. Diamond, who was highly visible in London and New York, had worked for Barclay's for 16 years and had been CEO for just 10 months.

On Monday, Barclays promised to launch an independently led audit of its business practices as Agius resigned as chairman, taking responsibility for last week's $453 million settlement of an interest-rate manipulation probe.


Barclay's was accused of a "serious, widespread" role in trying to manipulate the price of crucial interest rates that affect the cost of borrowing for millions of customers around the world. Barclay's is the only bank named so far, but some of the world's largest are apparently involved.


Diamond had run the Barclay's division that was involved in the scandal.


Telecoms and techs lead the market

The declines for United Technologies, Boeing, Caterpillar DuPont were offset by gains for telecom and technology shares and old-fashioned bargain hunting. Leading the pack were such big stocks as Verizon Communications (VZ), AT&T (T), Sprint Nextel (S), Apple (AAPL) and American Tower (AMT).

Stocks tumbled after the Institute for Supply Management said its June manufacturing index fell to 49.7% from May's 53.5%. A reading below 50% suggests the manufacturing economy is contracting, although economists say a reading of 47% is a true measure of slumping. The big reason for the decline was a plunge in the new-orders component of the index from 60.1% to 47.8%, the first decline since April 2009. The decline was so big that a few economists considered it a fluke.

The ISM report offset a gain in U.S. construction spending, but there were continuing concerns about Europe. The eurozone countries reported a record regionwide unemployment rate of 11.1% in May, up from 11% in April. Spain's unemployment rate was the highest at 24.6%, with Greece at 21.9% in March. Austria had the lowest rate, 4.1%, followed by the Netherlands at 5.1%, Luxembourg at 5.4% and Germany at 5.6%.

Microsoft takes a write-down
After the close, Microsoft (MSFT) said it was taking a $6.2 billion non-cash charge to write down nearly all of the value of its $6.3 billion 2007 acquisition of digital marketing company aQuantive. The charge will affect results for its online services business in the fiscal fourth quarter.

Microsoft said the acquisition has failed to generate the kinds of growth it had expected. Microsoft is the parent of MSN Money.

Shares were unchanged in after-hours trading after dropping 3 cents to $30.56 in the regular session.

The market runs into a wall
The market's decline came after stocks shot up on Friday on hopes for a European banking union. The result of the big rally was the best month for the Dow since October and the best June for the Dow and S&P 500 since 1999 and the Nasdaq's best June since 2000.

The market closes early on Tuesday and will be closed on Wednesday for the July 4 holiday. Automakers will report June sales on Tuesday. Major retailers will report June sales on Thursday.

Friday brings the June jobs and unemployment report. The report will be closely watched after job growth in May slipped to a reported 69,000. The consensus estimate is for a gain of 90,000 jobs, with the unemployment rate holding at 8.2%.

Energy prices -- New York close



Mon.

Fri.

Month chg.

YTD chg.
Crude oil (-CL)

$83.75

$84.96

-1.42%

-15.26%
(per barrel)











Heating oil (-HO)

$2.6759

$2.7099

-1.25%

-8.18%
(per gallon)











Natural gas (-NG)

$2.8240

$2.8240

0.00%

-5.52%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.6239

$2.6318

-0.30%

-1.26%
(per gallon)











Brent crude 

$97.34

$97.80

-0.47%

-9.35%
(per barrel)











Retail gasoline

$3.3260

$3.3300

-0.81%

1.53%
(per gallon; AAA)











Note: This chart and the chart at the end of the file are corrected versions.

Crude oil, gold move lower
Crude oil (-CL) settled down $1.21 to $83.75 a barrel after falling to as low as $82.10. Brent crude was down 53 cents to $97.27 after trading as low as $95.30.

The national average price of gasoline dropped to $3.326 a gallon, according to AAA's Daily Fuel Gauge Report. That's down from $3.353 on Friday and down 15.5% from its early April peak. Gasoline is still up 1.5% for the year; it was up as much as 20.2% for the year -- at $3.936 a gallon -- on April 6.

Gold (-GC) settled down $6.50 to $1,597.70 an ounce. Silver (-SI) fell 11.3 cents to $27.499. Copper (-HG) dropped 3.05 cents to $3.466 a pound.

Corn (-ZC), wheat (-ZW) and soybeans (-ZS) were higher because of the heat wave in the Midwest and South.

Interest rates were lower, with the 10-year Treasury yield falling to 1.565% from 1.659% on Monday. The dollar was higher against major currencies, including the euro and British pound.

Trading volume was extremely light as many on Wall Street are using the whole week to celebrate Wednesday's holiday.

JPMorgan and AT&T lead the Dow
Fourteen of the 30 Dow stocks were higher, led by JPMorgan Chase (JPM), up 55 cents to $36.28, and AT&T, up 54 cents to $36.20, and American Express (AXP), up 84 cents to $59.05. The laggard was DuPont, down $1.14 to $49.43. Jefferies analysts lowered their valuation on the industrial stock to "hold" from "buy" today and cut their price target to $55 from $62.

A total of 288 S&P 500 shares were higher, led by Constellation Brands (STZ) and Best Buy (BBY). Best Buy shares continue to move on speculation that founder Richard Schulze is mounting a bid to take the electronics retailer private.

Only 48 Nasdaq-100 stocks were higher, led by Sirius XM Radio (SIRI), up 14 cents to $1.99. The laggards were Fastenal (FAST) and Dollar Tree (DLTR)

Deals galore
That said, there were a lot of deals attracting attention.

Bristol-Myers Squibb (BMY) agreed late Friday to buy Amylin Pharmaceuticals (AMLN), the maker of a promising new diabetes drug, in a complicated deal valued at about $7 billion. To help finance the deal, Bristol-Myers is teaming up with AstraZeneca (AZN), which will pay about $3.4 billion in cash and share in the profits from Amylin’s sales. Amelyn was up $2.50 to $30.71. Bristol-Myers Squibb was up 10 cents to $36.05, and AstraZeneca was up 92 cents to $45.67.

German gas products provider Linde (LNEGY) will buy Lincare (LNCR) for $41.50 a share, or $3.8 billion. The price is 64% above Lincare's closing price on June 26. Lincare was up $7.32 to $41.34. Linde fell 26 cents to $15.23 in New York.

Micron Technology (MU) has agreed to buy Elpida Memory, which filed for bankruptcy earlier this year, for $754 million in cash and $1.76 billion in installments to cover debt. Wall Street likes the deal. Micron was up 24 cents to $6.55.

EverBank Financial (EVER), a banking company based in Florida that went public last month, has agreed to acquire Business Property Lending, a unit of GE Capital, for $2.51 billion in cash. EverBank was up 48 cents to $11.35.

Prescription drug giant GlaxoSmithKline (GSK) will plead guilty and pay $3 billion to resolve federal criminal and civil inquiries arising from the company's illegal promotion of some of its products, its failure to report safety data and alleged false price reporting as part of the largest health care fraud settlement in U.S. history, the Justice Department announced Monday.

The company agreed to plead guilty to three criminal counts, including two counts of introducing misbranded drugs — Paxil and Wellbutrin — and one count of failing to report safety data about the drug Avandia to the Food and Drug Administration.

Investors shrugged off the news. Shares were up 79 cents to $46.36.

Short hits from the markets -- New York close



Mon.

Fri.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0700%

0.080%

-12.50%

600.00%
5-year Treasury note 

0.669%

0.729%

-8.23%

-19.40%
10-year Treasury note

1.580%

1.659%

-4.76%

-15.55%
30-year Treasury bond

2.683%

2.763%

-2.90%

-7.13%
Currencies











U.S. Dollar Index

82.008

81.753

-1.20%

1.85%
British pound

1.5701

1.5704

-0.02%

1.05%
(in U.S. $)

 








U.S. $ in pounds

£0.637

£0.637

0.02%

-1.04%
Euro in dollars

$1.26

$1.27

-0.62%

-2.76%
(in U.S. $)

 








U.S. $ in euros

€ 0.794

€ 0.789

0.62%

2.84%
U.S. $ in yen 

79.68

79.92

-0.30%

3.35%
U.S. $ in Chinese

6.37

6.35

0.31%

0.70%
yuan











Canada dollar

$0.982

$0.985

-0.30%

0.05%
(in U.S. $)

 








U.S. dollar 

$1.020

$1.016

0.38%

-0.05%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,597.70

$1,604.20

-0.41%

1.97%
(per troy ounce)

 








Copper (-HG)

$3.469

$3.497

-0.79%

0.96%
(per pound)

 








Silver (-SI)

$27.4990

$27.6120

-0.41%

-1.49%
(per troy ounce)

 








Wheat (-ZW)

$7.7250

$7.5725

2.01%

18.35%
(per bushel)

 








Corn (-ZC)

$6.5575

$6.348

3.31%

1.43%
(per bushel)

 








Cotton 

$0.7202

0.7133

0.97%

-21.44%
(per pound)

 








Coffee

$1.7460

1.707

2.28%

-23.97%
(per pound)

 








Crude oil (-CL)

$83.75

$84.96

-1.42%

-15.26%
(per barrel)










 

144Comments
Jul 2, 2012 3:19PM
avatar
You guys are being too hard on Obama. How can you expect him to create millions of private sector jobs when he has never had one himself. 
Jul 2, 2012 3:09PM
avatar
The Obama administration is telling Americans whatever is necessary, in order for Obama to be re-elected. The economy is NOT improving, and eventually the truth will come out. There are NO jobs. Unemployment numbers are NOT being truthfully reported. Obamacare was just the final nail in the economy. Banks are keeping the money they were bailed out with by this administration, and home prices are NOT truly down, but interest rates are down in order to make Americans think they can buy inflated prices. Watch and see, eventually the truth will come out!!! 
Jul 2, 2012 1:03PM
avatar

I guess Wall Street is tired of giving us the Greece or Europe excuse.  Times to use "Growth" to manipulate the market.

Jul 2, 2012 4:02PM
avatar
shrug off what you will..............but in the end the truth about the poor state of the American economy will come out..... Give it up Obama!!!!!!!!!!!!!!1
Jul 2, 2012 2:24PM
avatar

Where you been manufacturing soft ??????  Has been since jobs started being out sourced an moved out of country!!!!  Places like India , China , Mexico etc: are slowing down also prices of all goods so inflated no one can afford to purchase any thing. too busy trying to put gas in car an food on the table

an pay for medical treatment.  BOTH sides need to look at their policies since both are to blame. STOP NAME CALLING AN POINTING FINGERS  ( AN FIX THE DAMN PROBLEMS YOU HAVE CREATED)

             ( OR GET OUT) NOVEMBER IS COMMING FAST!!!!!!!!!

Jul 2, 2012 1:00PM
avatar
Oh... OH...OH...... were up,...... Nope ZOINK were down, OH... OH.... OH.... WERE definitely up ........ ZOINK, nope were down. I wish tnvestors would leave the GOD DAMN stcoks alone, and quit f*cken with market. Profit taking, and commodities manipulation is really starting to chap my ****, And another thing , HEY REPORTER when the Euro or those that use it get their sh*t together why not report the news on it then, hearing the same up and down crap with you is really really getting to much to handle.
Jul 2, 2012 1:56PM
avatar
Come on..."investors"  are only cashing in on Friday's maket gains. Selling to make a buck before something else happens.
Jul 2, 2012 3:12PM
avatar
did the stocks move lower today because there's no HOPE today?
Jul 2, 2012 1:22PM
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When will the stock market go back to long term investing instead of hour by hour buy and sell?  I sure hope that in 26 years they will get it figured out or maybe we will still have to worry about the "Europe and China worries!!!!!!!"  There is sooooo much money to be invested by the main stream people and big buisness, but people are just scared to drop it in the abyss of idiots!!!!!!  Wake Up Ball Street!!!!!!
Jul 2, 2012 3:44PM
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Another shrug off headline.    How can you shrug off all pertinent  information?  Its like an ostrich  with its head in the sand.
Jul 2, 2012 3:56PM
avatar
GlaxoSmithKline is UP after a verdict requires them to shell-out $3 billion for fraud. WHO in their right mind says... oh, you have to pay fines on corruption? Let me invest. Use my money!

Utter stupidity with other people's retirement funds.

Jul 2, 2012 2:53PM
avatar
Wall Street is so concerned with Europe that they are blind as to what is happening in our own country. High unemployment, little job creation, house foreclosures and high gas and food prices to name a few has stagnated our own economy. They better wake up and pay attention to what is going on around them. It is time to take the shades off.
Jul 2, 2012 3:17PM
avatar
I thought for sure the market would be up big on the news that Anderson Cooper takes it up the butt.
Jul 2, 2012 2:57PM
avatar

Yummy........... New Transparent Koolaid....... A Democratic Specialty

 

Looks like coal oil ......... but it must be yummy because they all talk about wanting more. We wish we could share the ingredients but the chef claimed Executive Privilege.

Jul 2, 2012 3:16PM
avatar
I think once we vote Obama out and the health care is repealed, the market will double in 3 years.
Jul 2, 2012 3:51PM
avatar
"What the heck is weakness in Europe and China have to do with the U.S. Manufacturing index."

First, Ford is taking a beating in Europe. Nothing wrong with the cars, most nations have 20-30% unemployment. Second... what else do we manufacture? Weapons. we aren't dumb. We are only going to arm rebels, dictators and monster-makers. Wall Street put YOUR money into those Euro Bonds... normally, we wouldn't finance countries heading off the cliff.
Do any of you realize that by the end of Dubya's reign of error, there were less than a million people left in American manufacturing industries? at one time, it dominated the nation so entirely, that we had balanced budgets, balanced Congress and the ability to function. Now that the majority pushes paper or buttons, we have massive corruption, massive disruption and no economy. 
Kind of makes sense to offshore lawyers, puppet politicians, financiers, bankers and all of the paper and button pushers... and bring back manufacturing and industry to within our borders!
Jul 2, 2012 2:19PM
avatar
Stocks are heading down today on the recent news that Chinese toilet paper has been found to contain anti-American spyware and large traces of lead which can cause terminal butt swelling and mild crotch itch..... 
Jul 2, 2012 3:58PM
avatar

>>>The Obama administration is telling Americans whatever is necessary, in order for Obama to be re-elected<<<

 

And this differs from Romney.... how  exactly?

Jul 2, 2012 2:24PM
avatar
Second verse..... Same as the first!
Jul 2, 2012 3:37PM
avatar

"Banks are keeping the money they were bailed out with by this administration"

 

Are they only keeping the money they were loaned by this administration, or did they keep the TARP funds from the Bush Administration too?

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