Stocks storm back from steep losses

The Dow trims a 191-point loss to just 7 points. Dell slumps on weak earnings. Hewlett-Packard will cut 27,000 workers. A falling euro batters oil and gold. Facebook is higher, but the lawsuits have begun. New-home sales show life.

By Charley Blaine May 23, 2012 12:39PM
Charley BlaineUpdated: 9 p.m. ET

The stock market is still down today, but an ugly sell-off has morphed into something far more pleasant: basically a gain. 

The losses were prompted by worries about Europe and Greece. The turmoil on the continent pushed the euro to its lowest level against the dollar in two years. That means investors seeking safety see it in the greenback. That means lower U.S. interest rates.

One catalyst to the rebound appears to be Google (GOOG), whose shares were up $7.41 to $608.21 after a California jury found that the company had not infringed on patents owned by Oracle (ORCL). Another was that the euro rebounded off two-years lows after French President Francois Hollande and Italian Prime Minister Mario Monti supported the idea of eurozone bonds to stabilize European finances. German Chancellor Angela Merkel has opposed the idea.

While Facebook (FB) shares were up 98 cents to $31.98 today after two days of losses, for much of the day, Dell (DELL) was a big weight on technology stocks. Fiscal-first quarter earnings were much weaker than expected. Hewlett-Packard (HPQ) shares were lower during the regular session, but have jumped nearly 6% to $22.25 after hours after fiscal-second-quarter earnings of 98 cents a share beat the consensus estimate of 91 cents. It also said it will cut its headcount by 27,000 by October 2014.

The amazing thing with the close was this: Once down as many as 191 points, the Dow Jones industrials ($INDU) finished down just 7 points to 12,496. The Standard & Poor's 500 Index ($INX) ended up 2 points to 1,319 after sinking to as low as 1,297. It looks like 1,300 is proving a powerful support level. The Nasdaq Composite Index ($COMPX) ended up 11 points to 2,850. The Nasdaq-100 Index ($NDX) finished with an 8-point gain to 2,547.

Admittedly, the rebound may prove to be nothing more than short-covering, where investors who sell securities short buy them back to lock in profits. The Dow nearly fell below its 200-day moving average in the morning, a serious sign of investor worry, and its relative strength index finished at 15.2. Using RSI as a measure, a reading under 30 signals that the the stocks in the blue-chip index are oversold. Today's reading suggests the Dow stocks are hugely oversold.

The euro fell to as low as $1.2545 against the U.S. dollar but was at $1.2572 at 9 p.m. The early crushing knocked gold (-GC) and other metals lower. It pushed crude oil (-CL) below $90 a barrel for the first time since October. Stocks of big companies that generate large portions of their business in Europe also have been hit by the euro's woes. Think Dell, IBM (IBM), 3MM (MMM) and big banks.

HP sees $3 billion a year in savings from big job cuts.
HP closed down 70 cents to $21.08 after hitting a 52-week low of $20.76. It was the worst performer among the 30 Dow stocks and 6th worst among S&P 500 stocks. But the shares were up 5.6% to $22.21 on the news of better-than-expected earnings and the big job cuts.

The 27,000 job cuts will result in annual savings of $3 billion to $3.5 billion. The company will be offering an early-retirement program.

The majority of the savings will be reinvested into the company. It promised new investments in research and development in its core printer and personal computer businesses as well as marketing and sales.

HP's earnings of 98 cents a share after one-time charges beat the Street estimate of 91 cents but was down from $1.24 a year ago. Revenue was down 3% to $30.7 billion but better than the Street estimate of $29.92 billion.

Dell has a miserable quarter
Dell was the worst performer among S&P 500 and Nasdaq-100 stocks, finishing down $2.59 to $12.49; it hit a 52-week low of $12.31.

The personal-computer maker reported 43 cents a share after one-time charges are excluded. Wall Street was looking for 46 cents. Revenue fell to $14.42 billion from $15.02 billion a year ago. It guided lower for the second quarter.

Business was especially weak in notebook sales; they're getting cannibalized by tablets such as Apple's (AAPL). Sales to the public sector were weak and Europe was weak. Apple, the biggest influence on the Nasdaq-100, was up $13.59 to $570.56.

Energy prices -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Crude oil (-CL)

$89.90

$91.85

-14.27%

-9.04%
(per barrel)











Heating oil (-HO)

$2.8155

$2.8655

-11.58%

-3.39%
(per gallon)











Natural gas (-NG)

$2.7370

$2.7070

19.78%

-8.43%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.8015

$2.8592

-10.34%

5.42%
(per gallon)











Brent crude 

$105.56

$108.20

-11.49%

-1.46%
(per barrel)











Retail gasoline

$3.6780

$3.6800

-3.62%

12.27%
(per gallon; AAA)












A market that breaks even
Fourteen of the 30 Dow stocks ended the day higher, led by Bank of America (BAC), Alcoa (AA) and Wal-Mart Stores (WMT). Wal-Mart expects to add another 100 supercenters in fiscal 2013. The company had estimated 130 to 135 supercenters.

Meanwhile, 299 S&P 500 stocks closed higher, led by Expedia (EXPD), Netflix (NFLX) and  Tripadvisor (TRIP). In addition, 63 Nasdaq-100 stocks finished with gains, led by Avago Technologies (AVGO) and Expedia.

Costco Wholesale (COST), Tiffany (TIFF) and H.J. Heinz (HNZ) report results on Thursday. The government will release its weekly report on jobless claims. Futures trading suggests U.S. stocks will open modestly lower.

Crude oil slumps, along with gold
Crude oil settled down $1.95 to $89.90 a barrel in New York; it had traded as low as $89.28. Brent crude was off $2.17 to $106.03 a barrel after falling to as low as $105.25 a barrel. Crude is down 14.3% this month and 9% on the month.

The national average retail price of gasoline was $3.678 a gallon, down slightly from $3.68 on Tuesday, according to AAA's Daily Fuel Gauge Report.  The price is now down 6.6% since peaking in early April.

Gold was at $1,548.40 an ounce, down $28.20. It had fallen to as low as $1,532.80. Silver (-SI) and copper (-HG) fell 66 cents to $27.519 an ounce and 9.1 cents to $3.396 an ounce, respectively. Gold is off 1.2% for the year, with silver down 1.4% and copper 1.2%.

The 10-year Treasury yield fell to a record low 1.719% from Tuesday's 1.793%. If you think that's low, the 30-year German bund rate fell under 2%.

A two-year Swiss note yields -0.1%. Yes, you pay for the safety.

Facebook rises while the lawsuits start
While Facebook's shares were higher today, the controversy over the messy initial public offering continues. And so is the gamesmanship.

The New York Stock Exchange has been trying to get Facebook to give up its listing on on  the Nasdaq (NDAQ) system. The system suffered financial glitches Friday on Facebook's first day of trading. The result was delays in getting transactions reported and losses suffered, particularly by individual investors. Nasdaq shares were down 51 cents to $21.81 and are down 5.2% since Thursday's close.

Meanwhile, three Facebook investors filed a civil lawsuit today in New York, alleging the company and its underwriters failed to properly disclose changes to analysts' forecasts made at the underwriting banks.

The suit follows reports that Morgan Stanley and Goldman Sachs analysts cut their revenue forecasts on Facebook during the investor roadshow, a change that wasn't widely disseminated, The Wall Street Journal reported.

Late Tuesday, Massachusetts sent a subpoena to Morgan Stanley following the reports. Several other plaintiffs' lawyers have said they filed suits over the offering in other courts throughout the country, seeking class-action status.

The New York law suit, which also seeks class-action status, alleges the changes made to Facebook's offering document, which said that mobile-user growth could slow revenue growth, didn't accurately portray the impact on Facebook's finances.

How much chaos would a Greek departure from the eurozone cost?
In Europe, the question was when Greece would leave the Eurozone and how much chaos that would cause. Germany's Bundesbank said a Greek departure would be "manageable."

A bad day for European stocks immediately got worse. British, German and French stocks closed down more than 2%. The euro was trading at $1.2566.

A summit on the Greek question was to be held tonight, and there was little confidence anything positive would happen.

"The meeting may reveal a growing rift within the group as the anti-austerity movement gathers pace," David Song, currency analyst at Daily FX, told the Guardian newspaper in London. "However, it seems as though the European Central Bank will carry its wait-and-see approach into the second-half of the year in an effort to secure its independence."

More life in housing
If you're hungering for some good news, let us guide you to the April new-home sales report.

The report showed that sales of new homes rose 3.3% from March to a seasonally adjusted annual rate of 343,000 units. That's also up 9.9% from a year ago.

Now, don't get too excited. The February sales rate was 358,000 units, and the April sales rate is still off 75% from the 2005 peak of 1.39 million units. That, of course, was during the housing bubble. A more or less sustainable level of new-home sales may be 720,000 units, the 20-year average between 1983 and 2002.

The supply of new homes was just 5.1 months, down from 5.2 months in March and 6.7 months a year ago.

Luxury builder Toll Bros. (TOL) said it earned 10 cents a share on revenue of $373.7 million, up from a loss of 28 cents a share and revenue of $319.7 million a year ago.  "The spring selling season has been the most robust and sustained since the downturn began," CEO Douglas Yearley said in a statement. Shares rose 72 cents to $27.75.

Homebuilders were mostly higher on the new-home sales report. The Philadelphia Housing Sector Index ($HGX) was up 1.71 to 124.70. The index is up 21.2% this year.

Short hits from the markets -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0800%     0.080%

-11.11%     700.00%
5-year Treasury note 

0.728%     0.770%

-10.23%     -12.29%
10-year Treasury note

1.721%     1.793%

-10.13%     -8.02%
30-year Treasury bond

2.794%     2.892%

-10.13%     -3.29%
Currencies











U.S. Dollar Index

82.235     81.648     4.30%     2.13%
British pound

1.5696     1.5770     -3.36%     1.02%
(in U.S. $)

                   
U.S. $ in pounds

£0.637     £0.634     3.48%     -1.01%
Euro in dollars

$1.26     $1.27     -4.95%     -2.82%
(in U.S. $)

                   
U.S. $ in euros

€ 0.794     € 0.788     5.21%     2.90%
U.S. $ in yen 

79.62     79.98     -0.48%      3.26%
U.S. $ in Chinese

6.36     6.32     0.88%     0.48%
yuan

                     
Canada dollar

$0.976     $0.980     -3.65%     -0.48%
(in U.S. $)

                   
U.S. dollar 

$1.025     $1.021     3.79%     0.48%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,548.40

$1,576.60

-6.96%

-1.17%
(per troy ounce)











Copper (-HG)

$3.396

$3.487

-11.32%

-1.16%
(per pound)











Silver (-SI)

$27.5190

$28.1790

-11.27%

-1.42%
(per troy ounce)











Wheat (-ZW)

$6.6550

$6.8550

1.68%

1.95%
(per bushel)











Corn (-ZC)

$6.0350

$5.970

-4.85%

-6.65%
(per bushel)











Cotton 

$0.7041

0.738

-21.24%

-23.20%
(per pound)











Coffee

$1.6915

1.765

-5.79%

-26.34%
(per pound)











Crude oil (-CL)

$89.90

$91.85

-14.27%

-9.04%
(per barrel)










 

125Comments
May 23, 2012 1:01PM
avatar

Just a couple of tidbits...noticed the VIX has gone up 71% in 3 months,..if we are out of the recession and the unemployment rate is truly just over 8%, then in theory shouldn't businesses be just chugging along and growing?  If that is true wouldn't they need new computer and network stuff?  If that is true why is it that both DELL and HP are reporting dismal sales and lowered their forcasts?  HP considering 30,000 layoffs?  When numbers like that start getting thrown around are people going to feel like buying a house, a car, anything??

May 23, 2012 1:56PM
avatar
The whole system is rigged. Unemployment is really about 18% the government cooks the numbers  so that the economy looks better than it is, does anyone believe inflation is just 3%?? Thats the "official" government number. Unfortunately it doesn't end there, JPM's "trading error" (speculative bet not hedge) losses went up 50% today, now at 3 billion, with potential losses estimated at 18-20 billion. If losses reach that level, JPM will go bankrupt toppling the entire economy. The total derivative exposure at JPM is 79 TRILLION dollars, with most of these bets leveraged, so only a small move against them will bring huge losses. I hate to say it but it looks as though the entire system may very well collapse, yet nobody in the press will talk about this, why???
May 23, 2012 3:05PM
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Let me see...the United States checking account is over drawn, credit cards are maxed out...have nothing left to hock that China wants...

 

The leadership of the country wants to support people that don't want to work.....

The leadership of the country wants to add more people in government positions that really don't accomplish anything.

 

YUP...up the creek

avatar

You want the truth?  YOU CAN'T HANDLE THE TRUTH!!  The truth is The U.S. Government has broke this country!  Our money has no real value because it's backed by air!  (Kill th FED!!)  If we went back on the gold standard tomorrow, your dollar would be worth around .15 cents!  Our goverment spends money faster than they take it in and entitlement programs are not sucking has much as you think.  If Congress had left the money in the social security system like it was suppose to,  we would have a surplus!  Until we get a Congress and a President that are more interested in the good of America, instead of lining its own pocket we will have a problem.  I don't care if your a Republican or a Democrat, its both of their faults!   Explain to me why the president holds a $5000.00 a plate fund raiser, and it's attended by bankers, lawyers, and captains of industry, and these are the very people that he is going to raise taxes on, and they still attended?  I promise you if he were raising your taxes, you wouldn't attend!!  On a personal note, throw them all out!!   Require that any elected official put his investments in a "blind trust", and see if that doesn't stop the insider trading problem with our Congressmen and Senators!! 

    

        Require that any company that produces a product in a foreign country that wants to bring it into the U.S. pay a tariff on that product equal to any other imported good.   Allow only vehicles that are produced in this country to be sold in this country!  Use the tariffs to pay the unemployement of the American workers who lost their jobs because a factory moved to aquire cheap labor!!   By the way President Obama, why don't we just give the whole world free trade?  you we're so against it when you ran for president!   How about how you saved the U.S. automobile business?  With the taxpayer's dime and creating "Car Czars" so your buddies would have a job!  President Obama, the U.S. is not Chicago, and we won't put up with your kind of politics!!   Has any self respecting "brother" would say, STEP DOWN!!

May 23, 2012 5:56PM
avatar
With the DOW down almost 200 points, on bad news this morning and then rebounding, with no news about anything, only says to me that smart money was shuffling portfolios for tomorrow. The rest of the world was down about 2% today and we were in line, until the rebound. I don't remember anyone saying anything about anything, so the shuffel must be a secret for big money. Guess who pays the price tomorrow.
May 23, 2012 1:20PM
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There isnt two investors that is worried about Greece but all are worried about Wall Street!!!!
May 23, 2012 5:56PM
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Can someone explain how a barrel of oil has gone down at least 15% since April but retail gas is only down 6%?
May 23, 2012 4:03PM
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Stocks storm back?? More like "lever
 pulled, manipulation continues..."


May 23, 2012 3:02PM
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Interesting, the price of crude and the price of gasoline.  Crude is at 60% of what it was at its peak in 2008, but fuel prices are only about $.40/gallon less.  I hear all these excuses about how much more expensive it is to make.  I think it is based entirely on greed and bleeding the people dry.  It was only 13 years ago that I was paying $.68/gallon in the country's heartland for regular unleaded....   As far as I am concerned, these $%#@ can rot with their money.
May 23, 2012 6:22PM
avatar

IDIOT ALERT:

The market rallied today on news that rather than austerity moves the EU was now going to pump money into the system to stimulate growth.

All of the past infusions of money into the system have resulted in high unemployment and debt that is going to cause the end of the Euro and a shock to the world’s financial system

Definition of idiocy: Doing the same thing over and over and expecting a different result.-(from the Reteplabel dictionary of terms commonly misunderstood by Socialists like Obama).

DO NOT put your money into gold- Buy lead and the tools needed to give it direction (Guns).

May 23, 2012 4:08PM
avatar
OPINIONS?


43 Catholic diocese sued the US gov yesterday regarding Obama "care"

How many of you heard about it?
Most stations didn't cover it all. You know, such journalistic stalwarts as MSN, MSNBC, NBC, CNN, CBS, ABC barely a word about it,  if at all.
NY Times- page 17, etc, etc , etc
USA Today - page 8

Can you imagine a major religion, in a christian country and the "media" doesn't cover it?
When was the last time a major religion sued the USA, anyway ?
Answer- NEVER!

Yet, somehow, the media decided they didn't want you to know about it, or to trivialize it, exactly like the 4-6 cretins on this board will do.
Yes-- a crazed right wing Christian , right---

However, let some heathen, from some craphole in the middle east, stub his toe in NY City and he's suing all mankind and THAT will covered !
All in the sake of "fairness"

Yet, ANOTHER example of the lefty media trying to control what you hear, what you eat , what you drive, what you say, what is news worthy or not, what your opinions should be.

Lefties, lefties, lefties, Don't you ever get tired of being told what to do and what to think?
What's this thinking done for you, anyway?

Most of you have accomplished little, yet willingly would walk into the ocean to drown because Dear Leader told you too?
Don't you see you're being DUPED by the real one per centers?
The Soros, Corizine corrupt, posse?

THEY are on the top of the triangle, wiping scraps off the table for the rest of you.

You are too blame for your failed ideology and stupidity.
It's not me, it's YOU!
it's not the R's - it's YOU
 
May 23, 2012 5:20PM
avatar

Yes. Today, the DOW ended with the mark of The Beast, -6.66.

 

I'm amused.

May 23, 2012 5:40PM
avatar
Oh Boy, i see some unusual propping up at 2:30pm...our stimulus money hard at work buying things...i give up...this market makes no sense..senseless...i'll take my chances in hard tangible assets.
May 23, 2012 9:12PM
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Such a great country! We dont care about anyone but ourselves! We can stop buying Chinese and supporting corporations that ship jobs overseas! But we don't just to save a dollar. No one cares that eventually the money will be gone! China India and greedy corporate America will have it all! But let's not think of that Let's think of the pennies we will save to buy crap that we will have to keep buying and in the long run end up spending our money three fold! They're laughing at us! Cause we will be dancing for pennies and either on food stamps or if we have an impeccable record and never posted any crazy pictures on Facebook they will let us work part time for minimum wage! Not the country I want to live in! But the country my kids probably will live in... its sad
May 23, 2012 2:34PM
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Advised you to watch out for sucker's rallies....We just had a decent size one and at 1410 hrs they reversed direction and down we go again....Manipulators are in complete control, they can do anything and everything they want to...Just stay away, we don't see things getting any better today...Too many of these scumbags...Although, we never like to say never.

May 23, 2012 4:15PM
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Interesting note, oil has been dropping for the past few days, but here in the burbs outside Chicago, gas went up 20 cents yesterday.  hmmmmm  Can you say Memorial Day weekend gouging? 
May 23, 2012 6:17PM
avatar
How about we pass an incentive for Congress to create solutions and make decisions. They are only paid based upon the results we see. Like $1,500 per major piece of legislation passed through both sides of Congress and signed into law by the President. Naming Bridges and Post Offices  $15.00. That should put the service back in Public Service. They would never vote this idea through though.
May 23, 2012 4:29PM
avatar

43 Catholic diocese sued the US gov yesterday regarding Obama "care"

According to Gallup, in every year since 2002 more Americans think the media show liberal bias than think the media show conservative bias.

 

If the Liberal Message is so euphoric why do they feel it is so necessary to force feed it to us continually by buying and using the major news outlets?...........  I want un-biased news reporting....

May 23, 2012 8:44PM
May 23, 2012 5:09PM
avatar

Oil below 90.00 gas goes up another dime.groceries up everything up except wages  an jobs!!!!!!

When is someone going to give us the real truth?? been lying so long they can't remember what it is!!!

  Only reason the church is suing is because of birth control issue! Maybe if more pepole practiced it we would not be paying the so called third world countries so much money so they can buy more guns to kill each other.

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