Stocks slump on worries about Europe and jobs

The Dow falls 156 points on worries about Europe and disappointment with jobless claims and manufacturing weakness in mid-Atlantic states. Facebook prices its IPO at $38. Wal-Mart results cheer investors. Apple slumps.

By Charley Blaine May 17, 2012 11:26AM
Charley BlaineUpdated: 7 p.m. ET

Stocks slumped in late-day trading as worries about the domestic economy and the European debt crisis offset decent earnings from Wal-Mart Stores (WMT) and the interest in Facebook's initial public offering.

The Dow Jones industrials ($INDU) finished at their lowest level since Jan. 13. It was the blue chips' fifth straight loss and the 11th in 12 sessions. The euro dropped below $1.27, and the 10-year Treasury yield hit a record low 1.702%.

Facebook, meanwhile, priced its IPO at $38 a share, raising $16 billion for early investors and the company. It's the largest Internet IPO ever. Trading is expected to start at 11 a.m. ET Friday.

The IPO couldn't overcome the worries about Europe and the domestic economy. There was a a disappointing report on initial jobless claims and a surprising decline in manufacturing reported by the  Federal Reserve Bank of Philadelphia. The reports raised fears of a slowdown, although many economists believe the economy is stronger than a year ago.

The Dow closed down 156 points to 12,442. The Standard & Poor's 500 Index ($INX) was off 20 points to 1,305, also its fifth loss in a row and its lowest close since Jan. 17. The Nasdaq Composite Index ($COMPX) dropped 60 points to 2,814.

The Nasdaq-100 Index ($NDX), heavily influenced by Apple (AAPL), was off 53 points to 2,509. Apple was down $15.96 to $530.12. The stock is off 16.7% from its April 9 closing high of $636.23 -- perhaps, Barron's suggested, because of all the hype about the Facebook IPO. It is also known that several big hedge funds have trimmed their positions in the stock.

Facebook worth billions
At $38, Facebook is worth as much as $104 billion. There had been talk about raising the price to $39. Under SEC rules, the price could rise as much as 20% above the high end of the range.

But, The Wall Street Journal reported, investors rebuffed the company and its investment bankers.

The Facebook pricing is an important step in taking a company public. The pricing means the company sells the shares to its underwriters, who then market them to various customers before trading starts on Friday.

Morgan Stanley is the lead underwriter.

Energy prices -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Crude oil (-CL)

$92.56

$92.81

-11.74%

-6.34%
(per barrel)











Heating oil (-HO)

$2.8490

$2.8976

-10.53%

-2.24%
(per gallon)











Natural gas (-NG)

$2.5940

$2.6180

13.52%

-13.22%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.8782

$2.9209

-7.89%

8.31%
(per gallon)











Brent crude 

$107.49

$111.71

-10.08%

-0.10%
(per barrel)











Retail gasoline

$3.7220

$3.7280

-2.46%

13.61%
(per gallon; AAA)












After the close, shares of Salesforce.com (CRM) and Applied Materials (AMAT) were both higher after quarterly results beat estimates. Both also boosted quarterly guidance. Shares of Autodesk (ADSK) were down as investors were disappointed the company did not boost its guidance.

Futures trading suggests the stock market may open up slightly. The fact is the market has become quite oversold, and a short-term rally at least is about to erupt.

Europe remains the big question
Adding to today's stress was continued weakness in European stocks as Greece's financial crisis weighed on investors. Truth be told, Europe was probably the biggest problem for the market.

The worries over Europe has pushed up demand for dollars; the euro has fallen against the dollar for 12 straight days. The U.S. Dollar Index, which measures the greenback against a basket of currencies, is also up for 12 straight days. The currency moves are a big reason why stocks are lower.

The euro was trading at $1.2708, down from Wednesday's $1.2721. The euro is trading at its lowest level against the dollar since Jan. 16. The 10-year Treasury yield fell to 1.702% from Wednesday's 1.765%.

The euro is why crude oil (-CL) in New York is lower. Crude settled at $92.49 a barrel, down 32 cents. It's off 11.7% this month and 6.3% this year.

So, one should not be surprised that stocks across Europe were down at least 1%.

Moody's Investor Service cut its ratings on four Spanish regions, citing their poor fiscal performance in 2011 and likelihood they won't meet goals set by the Spanish government. Ratings on two regions -- Catalunya and Murcia -- were dropped below investment grade.

Meanwhile, Brent crude was down $4.93 to $107.49 a barrel. It's flat on the year but was up 17.5% on March 1, when it settled at $126.20.

The national average price of unleaded regular gasoline was down to $3.722 a gallon from Wednesday's $3.728, according to AAA's Daily Fuel Gauge Report.

Gold (-GC), however, settled up $38.30 to $1,574.90 an ounce as safety remains a big concern for investors.

Jobless claims hold steady at 370,000; leading indicators slip
Jobless claims were unchanged at 370,000 in the latest week, the Labor Department said today. Economists had projected that claims would come in at 365,000. The data suggest nonfarm payrolls, to be reported on June 1, will rise by about 150,000.

Meanwhile, the Philadelphia Federal Reserve Bank said its manufacturing index fell to minus-5.8 in May from 8.5 in April, quite a bit lower than expected. Of greatest concern was that the report's employment index fell more than expected. But some economists cautioned that the report, while widely watched, can be quite volatile.

The Conference Board's Index of Leading Economic Indicators fell 0.1% after a 0.3% gain in March. The Street was looking for a gain of 0.1%. The index is used to forecast where the economy may be headed over the next three months.

Wal-Mart earnings impress; Caterpillar's growth is a concern
Wal-Mart was the top performer among the 30 Dow stocks. Shares moved up $2.49 to $61.68. The company said net income for the fiscal first quarter rose 10% to $3.74 billion, or $1.09 a share, from $3.4 billion, or 97 cents, a year ago. The Street estimate was $1.04 a share. Revenue rose 8.5% to $113 billion, ahead of the consensus estimate of $110.5 billion.

Caterpillar (CAT) was the Dow laggard, down $4.06 to $87.80. The company reported that sales over the February-April period were up 12% from a year ago. The problem is that sales growth has been slowing. It had been as high as 27% in the November-January period. North American sales in the February-April period were up 34%, although that was lower than November-January's 47% gain.

Caterpillar reports dealer sales growth on a three-month rolling basis.

Caterpillar shares are off 24.4% since peaking this year on Feb. 23 at $116.20.

Hewlett-Packard (HPQ) shares were up 3 cents to $22.06 on reports that the company will cut its workforce by roughly 8% or 25,000 jobs. An announcement is expected next week.

JPMorgan Chase (JPM) shares were down $1.53 to $33.93. The New York Times reported that active trading by hedge funds has boosted the loss resulting from JPMorgan's bad trade from $2 billion to $3 billion. JPMorgan sources disputed the assertion.

Sears Holdings (SHLD), up $1.55 to $52.42, was the top-performing S&P 500 stock. The company reported better-than-expected fiscal-first-quarter results and said it was spinning off part of its Sears Canada business. Sears earned $189 million, or $1.78 a share, up from a loss of $170 million, or $1.58, a year ago. Revenue was off 2.8% to $9.27 billion.

Only six Dow stocks were higher today, along with just 30 S&P 500 stocks and five Nasdaq-100 stocks.

Short hits from the markets -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0900%     0.090%

0.00%     800.00%
5-year Treasury note 

0.730%     0.740%

-9.99%     -12.05%
10-year Treasury note

1.702%     1.765%

-11.12%     -9.03%
30-year Treasury bond

2.805%     2.906%

-9.78%     -2.91%
Currencies











U.S. Dollar Index

81.54     81.524     3.41%     1.26%
British pound

1.5813     1.5918     -2.64%     1.77%
(in U.S. $)

                   
U.S. $ in pounds

£0.632     £0.628     2.71%     -1.74%
Euro in dollars

$1.27     $1.27     -4.07%     -1.92%
(in U.S. $)

                   
U.S. $ in euros

€ 0.787     € 0.786     4.24%     1.96%
U.S. $ in yen 

79.30     80.34     -0.87%      2.85%
U.S. $ in Chinese

6.32     6.31     0.30%     -0.10%
yuan

                     
Canada dollar

$0.982     $0.988     -3.05%     0.14%
(in U.S. $)

                   
U.S. dollar 

$1.018     $1.012     3.07%     -0.22%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,574.90

$1,536.60

-5.37%

0.52%
(per troy ounce)











Copper (-HG)

$3.479

$3.478

-9.15%

1.25%
(per pound)











Silver (-SI)

$28.02

$27.196

-9.66%

0.38%
(per troy ounce)











Wheat (-ZW)

$6.5775

$6.3875

0.50%

0.77%
(per bushel)











Corn (-ZC)

$6.2500

$6.200

-1.46%

-3.33%
(per bushel)











Cotton 

$0.7665

0.7697

-14.26%

-16.39%
(per pound)











Coffee

$1.8010

1.78

0.31%

-21.58%
(per pound)











Crude oil (-CL)

$92.56

$92.81

-11.74%

-6.34%
(per barrel)










 

252Comments
May 17, 2012 4:24PM
avatar

Lets look at some other things that might indicate that we are headed for about a 20% drop from our current levels. The true unemployment rate is closer to 17% than the 8.2% the govt. says it is. Consumer debt is increasing at an alarming rate. After Greece leaves the Eurozone; Spain, Portugal, Ireland, and possibly Italy and France will follow. the holders of any European debt will suffer tremendous losses. This will inevitably lead to a major slowdown in the Chinese and the U.S. economies. There just will not be the demand for goods and services now produced. Oil prices are about to hit $90 per bbl and once that happens they will not stop until they reach $75 per bbl.  and every other commodity will most likely follow. I am looking at Dow 9,000 or lower by the election.

 

Bye Bye Barack-Your presidency will be forever compared to that of Jimmy Carter.

May 17, 2012 4:22PM
avatar
What is unbelievable here is that some people on this comment page would actually be willing to bail out Wall Street if it collapsed, along with the unionized auto industry, and many also would not  mind if Uncle tapped our iras and 401ks to fight some more damned wars.  It makes me ashamed to live among such milquetoast.
May 17, 2012 4:20PM
avatar

let me ask this question to all.

 

WHAT WOULD HAPPEN IF ALL AMERICANS JUST STOP PAYING ON MORTGAGES,CREDIT CARDS. WHAT WOULD CONGRESS DO? WHAT WOULD WALLSTREET DO? DO YOU ALL RELISE WHAT WE THE PEOPLE CAN DO IF WE ALL DO IT TOGETHER, THINK ABOUT THIS

NO ONE WORKING FOR 30 DAYS, I MEAN NO ONE BUYING ANYTHING FOR A FULL 30 DAYS

 

NOW THATS WHAT NEEDS TO HAPPEN. I AM READY.  ARE Y

May 17, 2012 4:17PM
avatar
"CASH< GOLD<WATER<FOOD<FUEL​<TOILET PAPER(A MUST)  AND GUNS"

Add land ( for the bunker ) and ample beer, and we're ready to rumble!!!!!!!!!!!!!!!!!! ;)
May 17, 2012 4:13PM
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To many special interest groups. To many groups being recognized as having legitimate causes. The most important cause in this country should be us, the voting public, force our government to root out waste and fraud that is rippling through every entitlement program in this country, instead of creating taxing instruments in the guise of casinos, lotteries, speed cameras, right turn on red cameras, etc. We need independent studies showing the need for speed cameras and right turn on red cameras. Cut the state pensions for workers and teachers and have state employees and teachers responsible for their own retirement funds. Pulling pension money from grossly underfunded pension funds is illegal and if any young person getting into the teaching profession or wanting a government job should be raising holy hell with the teacher's union, state and federal governments and it's retired members in addition to our elected officials. This leads us to term limits for all politicians and their forfeiture of pension benefits if they are unable to properly fund those pensions during their terms in elected office. All for one and one for all!

May 17, 2012 4:12PM
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If businesses were to invest in their employees with that HUGE amount of cash they are sitting on, a lot of problems could be avoided. But why do that when they can just lay them off in a month and contribute to the problem instead of solving it now. Think of the jump in demand that would cause. No, can't have the human capital actually controlling any capital.
May 17, 2012 4:12PM
avatar
What the @#$% does the Philadelphia Federal Reserve Bank know about manufacturing?  That's like asking a baseball umpire about the NFL.

Institute of Supply Management is the only organization that has the foggiest notion what's going on in manufacturing.

Banks drive in the rear-view mirror, and are populated by some of the most pedantic, stupid people I know.

May 17, 2012 4:11PM
avatar
"HAHA keep cash under pillow or buy gold? "

Do whatever you want, just don't finance it! Stick with "Reach out and touch it" investments for now.
May 17, 2012 4:10PM
avatar

they said today no change in jobless claims, they remain unchanged, hahahahahahahaha right

 

it was so bad, they didn't want to scare americans that it all comming to a head, like a ripe pimple ready to explode, hahahahahahaha

 

cant wait, to see american fighting for food,water,gas,oil to heat. people wake up and take our

 

country back  now.  revolution now though all out of washington and start over

May 17, 2012 4:09PM
avatar
Facebook has to raise its IPO so it can bring in more greedy people as the brain washing continues, Face Book knows it is now or never...! They feel the other shoe dropping and it is not going the be pretty...!! As the economy dipps into ression once again and at best stalls out of a month or three the Market fells that the perfect strom is about to hit...what could that be...? Well we all know what that is " THE BIGGEST COLLAPES ON THIS GODS EARTH" Chase will fall with trillions in debts and growth as the collapse starts to ripple accross the country....Dallor General will be the New Saks Fith Avenue and WallMart is a dust bowl as people stop to shop for more that a week at a time with all the higher prices and THE BIGGEST INFLATION ABOUT TO HIT THE USA...I compare it to Agentina in the 70"s with 200 % inflation per month......and the dollar collapses......Watch for this as Europe implodes...in the next two months.....Good Luck...!
May 17, 2012 4:03PM
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BBBOOOOOOYYYYAAHHHHHHH let the good times roll.
May 17, 2012 4:01PM
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 Scenario: Hey Chase i TRIED to deposit money so i could pay my mortgage to your failed bank but the regulators wouldn't LET me.  One of them said only a fool would put money INTO a failed bank just so they could pay their  bankruptcy bills. So now what? Guess i'll just live here for free until i hear otherwise!
May 17, 2012 4:01PM
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this will be like the burning of rome
May 17, 2012 4:00PM
avatar

I did great today with my 401 M(Matress) investments. How did all of you imbeciles do today? I LOVE IT!

 

DIE FRAUD STREET, DIE!

May 17, 2012 4:00PM
May 17, 2012 3:59PM
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"SELL   SELL     SELL "

They already did..........
May 17, 2012 3:56PM
May 17, 2012 3:53PM
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" If Chase fails and my money is frozen can I just pass on my Chase mortgage until it is unfrozen?"

If Chase fails maybe they'll just write off all the mortgages!  Just think of the money those people could pump back into the economy!!!!!!!! LOL 
May 17, 2012 3:51PM
avatar
 If Chase fails and my money is frozen can I just pass on my Chase mortgage until it is unfrozen?.And unless somebody steps in and takes over my mortgage, wouldn't I be forced to pay the entire loan back at once?
May 17, 2012 3:45PM
avatar
"but the top 1% of income earners did receive 17% of all income in the year 2003 and 21.3% in 2006. "

The thing with this is, even if you downgrade their tax contributions 5% for '03 - '06 to 31%, they still exceeded their income% with their tax%. I'm not one of them, but If I was, that wouldn't entice me to reinvest much.
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