Dow slumps 313 after Obama's re-election
Investors fear failure to fix the fiscal cliff will lead to recession. European stocks slump after ECB President Draghi says even Germany is weakening. Apple has fallen 20% since September. Bank and energy stocks fall. Oil and gold slip.
A day after President Barack Obama won a second term, stocks suffered their worst beating in nearly a year.
Late selling caused to the Dow Jones Industrial Average ($INDU) to finish down more than 300 points, its largest loss since Nov. 9, 2011. The blue-chip index ended the day below 13,000 for the first time since Aug. 2, and the major U.S. averages were all down at least 2.4%.
Bank stocks were the weakest sector in part because it's likely the Dodd-Frank financial reform bill will remain largely intact. In addition, Elizabeth Warren, a critic of many U.S. banking practices, won a seat in the U.S. Senate. JPMorgan Chase (JPM), a critic of bank regulation, was down $2.32 to $40.56. Health insurance stocks were lower because the Patient Protection and Affordable Care Act Reform Act -- aka Obamacare -- is likely to stay in place.
Meanwhile, oil prices fell back sharply in part because of worries about global demand. Europe became a worry after European Central Bank President Mario Draghi said he expected no change to the weak eurozone economy in the near future. Worse, he said, the weakness has begun to affect Germany. European stocks immediately sold off -- and sharply, too. The dollar rose against the euro and British pound.
The Dow closed down 313 points to 12,933, its lowest close since July 26. The Standard & Poor's 500 Index ($INX) slumped 34 points to 1,395, its first close below 1,400 since Aug. 6. The Nasdaq Composite Index ($COMPX) dropped 75 points to 2,946, its biggest loss since Nov. 9, 2011.
Article continues below.The Nasdaq-100 Index ($NDX) had fallen 68 points to 2,613.
And that brings us to Apple (AAPL), which represents some 17% of the Nasdaq 100's market capitalization and roughly 4% of the value of the S&P 500. The stock is off $22.20 to $558. That's down 20.9% from its intraday peak of $705.07. Selling in the shares accelerated this morning when the stock hit $564 -- 20% below that intraday high.
After the close, however, Qualcomm (QCOM), the big maker of chips used on mobile phones, forecast fiscal first-quarter sales and profit that exceeded analysts’ estimates as it increases production of its most expensive chips. Shares were up $4.78, or 8.2%, to $62.90 after hours after falling $2.25 to $58.12 in regular trading.
Crude oil takes a dive
Crude oil (-CL) in New York settled down $4.27 to $84.44 a barrel. Brent crude was off $4.36 to $106.71. One reason for the decline was the decline in coal prices and coal stocks, a reaction to the election.
The national average retail price of gasoline fell to $3.462 a gallon from Tuesday's $3.463, according to AAA's Daily Fuel Gauge Report.
Gold (-GC) settled down $1 to $1,714 an ounce. Silver (-SI) fell 37 cents to $31.66 an ounce. Copper (-HG) fell 6.5 cents to $3.441 a pound.
Interest rates fell as the dollar moved higher. The 10-year Treasury yield fell to 1.632% from Tuesday's 1.742%.
|Energy prices -- New York close|
|Wed.||Thur.||Month chg.||YTD chg.|
|Crude oil (-CL)||$84.44||$88.71||-2.09%||-14.56%|
|Heating oil (-HO)||$2.9621||$3.0529||-3.27%||1.64%|
|Natural gas (-NG)||$3.5780||$3.6170||-3.09%||19.71%|
|(per mil. BTU)|
|Unleaded gasoline (-RB)||$2.5889||$2.6989||-1.57%||-2.58%|
|(per gallon; AAA)|
A tough road ahead for Obama, Congress
Today's slump is reminiscent of what happened the day after Obama won the 2008 election. The Dow fell 486 points that day and 443 points the next.
The bottom line on the sell-off is Obama will get no honeymoon from his re-election. He and Congress face the potential that doing nothing about the fiscal cliff -- the witch's brew of tax increases and spending cuts due to kick in after the New Year -- will cause the economy to slide back into recession, as many economists claim.
Ratings agency Fitch Investors warned today that the U.S. probably would lose its AAA credit rating if the administration and Congress don't address the problem.
"The economic policy challenge facing the president is to put in place a credible deficit-reduction plan necessary to underpin economic recovery and confidence in the full faith and credit of the U.S.," a company statement said today.
Is a rally forming?
Maybe. It's true that the Dow and the Nasdaq closed the day below their simple moving averages. That's a signal that the market is headed lower, and there was lots of chatter to that end today.
At the same time, the relative strength indexes for the Dow, S&P 500 and Nasdaq are all under 30. When these indicators drop below 30, that suggest the market overall is oversold and could be ripe for a rebound relatively soon.
In late May, the the RSI for the three indexes fell below 10. The market bottomed on June 4, with the Dow jumping about 12.5% up through Oct. 5.
That is, admittedly, is a technical view. What won't help markets are the riots today in Greece at the end of a two-day general strike called to oppose a €13.5bn ($17.2 billion) package of cuts demanded by the European Union, the European Central Bank and the International Monetary Fund in return for a financial lifeline to prevent the government running out of money.
Thursday brings the weekly report on jobless claims and the September report on the nation's trade balance. The key earnings report comes after the close from entertainment and media giant Walt Disney (DIS). Also reporting: Wendy's (WEN), Kohl's (KSS), Zipcar (ZIP) and Boingo Wireless (WIFI).
There may be a bounceback rally. Futures suggests the Dow will open 50 points higher, with the S&P 500 up 5 points and the Nasdaq-100 up 9 points.
A big, bad lossThis was a day when stocks that might have done well under a Romney administration were clobbered: defense, coal, oil and gas, health insurers, steel, banks and broker. And everything else seemed to run over with them.
One group that did remarkably well: gun makers as investors speculated an Obama administration attempt to regulate gun selling more closely. Sturm Ruger (RGR) jumped $3.04 to $47.68. Smith & Wesson Holding (SWHC) surged 91 cents to $10.37.
All 30 Dow stocks were lower, but 109 points of the index's loss was concentrated in five stocks: Caterpillar (CAT), IBM (IBM), Exxon Mobil (XOM), Chevron (CVX), and JPMorgan Chase.
The best Dow performers, relatively speaking: Walt Disney (DIS), Wal-Mart Stores (WMT) and Johnson & Johnson (JNJ). The biggest percentage losers were Bank of America (BAC), JPMorgan and Hewlett-Packard (HPQ).
Only 28 S&P 500 stocks were higher, led by Tenet Healthcare (THC), JDS Uniphase (JDSU) and Time Warner (TWX). Coal-producer Peabody Energy (BTU), investment bank Morgan Stanley (MS) and health insurer Humana (HUM) were the laggards.
Only six Nasdaq-100 stocks were higher, led by Netflix (NFLX) , News Corp. (NWSA) and medical-equipment wholesaler Henry Schein (HSIC) Research In Motion (RIMM) and for-profit education company Apollo Group (APOL) were the laggards.
Research In Motion fell 82 cents to $8.24 after Pacific Crest Securities analyst James Faucette wrote that the company's BlackBerry 10 operating system would be 'dead on arrival" when it comes to market early 2013.
|Short hits from the markets -- New York close|
|Wed.||Thur.||Month chg.||YTD chg.|
|13-week Treasury bill||0.0900%||0.090%||-18.18%||800.00%|
|5-year Treasury note||0.662%||0.744%||-7.41%||-20.24%|
|10-year Treasury note||1.632%||1.742%||-3.20%||-12.77%|
|30-year Treasury bond||2.821%||2.916%||-1.05%||-2.35%|
|U.S. Dollar Index||80.867||80.843||1.10%||0.43%|
|(in U.S. $)|
|U.S. $ in pounds||£0.625||£0.625||0.89%||-2.86%|
|Euro in dollars||$1.28||$1.28||-1.48%||-1.44%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.783||€ 0.780||1.50%||1.46%|
|U.S. $ in yen||80.13||80.39||0.41%||3.93%|
|U.S. $ in Chinese||6.27||6.24||0.52%||-0.95%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$84.44||$88.710||-2.09%||-14.56%|
Obama to base. Obama to base. Come in. May Day!! May Day!! We're inverted. We're going in. Brace for impact!
Can I get a flying lesson now?
for ALL OF YOU REDUMBICANS, from newt ginrich himself whom I dont like. huge supporter of Romney, read this! this is a THROW BACK:
Newt Gingrich’s positive campaign expired today. It was pronounced dead at 10:12 AM, Monday morning, after reports surfaced that the candidate accused rival Mitt Romney of amassing a fortune off the misery of laid-off workers.
The fatal moment came after Gingrich was asked by reporters whether he should return some of his reported $1.6 million in consulting fees from housing giant Freddie Mac in light of the 2008 subprime mortgage collapse.
“I would just say that if Gov. Romney would like to give back all of the money he’s earned from bankrupting companies and laying off employees over his years at Bain, that I would be glad to listen to him,” Gingrich in New Hampshire after a town hall. “I’ll bet you $10, not $10,000, that he won’t take the offer,” he .
Gingrich has up to this point made an ostentatious display of his positive campaign, repeatedly pledging to against Romney and other rivals even as they pile on him in debates, ads, and public statements. But the slap at Romney’s time at Bain, a general election vulnerability that’s rarely come up in the more investor-friendly Republican primary, suggests he may be departing from that strategy.
The whole point to the story, if he did this which he did and admitted it, then who are you to him???
Well I've grown weary...Even after a nap earlier....It was a Great Celebration last night..
And I have some financial balancing to do...
You guys are very,very busy on here.
Yup 4 more years....
My oh, my Classic......I've got them and as an old man, they keep getting bigger everyday...
They are displacing something else..Think it happens with the elders..??
Curious how the re-election of the administration that oversaw a 7000 point increase in the market would cause a 300 point drop. In another time, it would have been a cause for celebration. The smart money boys must be in quandry. Obviously things did not go according to plan. Though they seemed very happy to profit from the Obama/Fed induced run-up they seem to be thinking that all that is coming to an end. Add to that the possibility that dividend and cap gains might go up on Jan 1, there could be a reckoning coming.
I've been out of this market for a long time because it hasn't made sense for years. Maybe it's about to "adjust" back to where it should be.
The America I love was lost last night. In it's place we have a country of people who expect government to provide basic needs that in the past we had to work for. As a result I am going to cut spending and increase my IRA contributions to the max to limit my taxable income. I will try in every way possible to limit my part in the National economy. I will work to provide for basic needs but no longer have the desire to help the economy improve in any way. If Americans want failure let them have it. I used to buy American made products whenever possible even if they were more expensive. Now I will join the ranks of cheaper no matter where it is made. America will never be what it was and will fail because of the what can you do for me electorate.
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[BRIEFING.COM] Equities ended on their lows with the S&P 500 down 1.4%.
The S&P entered today's session with a week-to-date gain of 1.5% as investors expected reassuring words from today's Federal Open Market Committee Statement.
Stocks traded with slim losses until this afternoon's FOMC Statement and subsequent comments from Chairman Bernanke sent equities and Treasuries to their lows while also providing a significant boost to the dollar.
Today's Statement was ... More
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