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.

By Charley Blaine Nov 7, 2012 1:45PM
Charley BlaineUpdated: 8:32 p.m. ET

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%
(per barrel)











Heating oil (-HO)

$2.9621

$3.0529

-3.27%

1.64%
(per gallon)











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)











Brent crude 

$106.82

$111.07

1.08%

-0.52%
(per barrel)











Retail gasoline

$3.4620

$3.4630

-1.68%

5.68%
(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 loss

This 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 (HSICResearch 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.
Treasury yields











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%
Currencies











U.S. Dollar Index

80.867

80.843

1.10%

0.43%
British pound

1.5995

1.6000

-0.88%

2.94%
(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%
yuan











Canada dollar

$1.004

$1.008

0.40%

2.37%
(in U.S. $)

 








U.S. dollar 

$0.996

$0.992

-0.33%

-2.32%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,714.00

$1,715.000

-0.30%

9.39%
(per troy ounce)

 








Copper (-HG)

$3.4415

$3.506

-2.16%

0.16%
(per pound)

 








Silver (-SI)

$31.661

$32.034

-2.03%

13.42%
(per troy ounce)

 








Wheat (-ZW)

$8.940

$8.770

3.41%

36.96%
(per bushel)

 








Corn (-ZC)

$7.4425

$7.410

-1.52%

15.12%
(per bushel)

 








Cotton 

$0.6983

$0.701

-0.34%

-23.83%
(per pound)

 








Coffee

$1.5120

$1.506

-2.23%

-34.16%
(per pound)

 








Crude oil (-CL)

$84.44

$88.710

-2.09%

-14.56%
(per barrel)










 

1653Comments
Nov 7, 2012 5:48PM
avatar

What if we were to start bartering more, pull slowly out of the markets and thus reduce our income, essentially we will be saving more and reducing tax revenue that is to be supporting all of these Obama supporters.  The only way we can put a clinch on them (BO supporters) is to reduce income tax intake and therefore freecare to the loafers that don't want to work

Nov 7, 2012 5:47PM
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Well, at least half the country saw this coming.....
Nov 7, 2012 5:47PM
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Market should bounce back tomorrow, especially oil. ingeniousinvesting.com
Nov 7, 2012 5:47PM
avatar

For those of you who stole under the guise of 'Wall Street economics' your thievery is ending. You will finally be able to look into the mirror and say "I was wrong to fleece America for my own little pittance and i will not do it again."

 

 

Mind that you do!! 

Nov 7, 2012 5:47PM
avatar
Bye, Bye  American Pie!! Going to Watch Ovomit raise our taxes, while you wait in Line (for food). Even if it means you are going to loose your job and never see freedom again.  

This was written before it happen, so it no surprise.  Now the one's voted for him has the mark.  Get ready of 4 years of Hell.  I am ready, I hope all the other 47%ers  are ready.  They forgot who was forking the bill for all of those social services programs.  

I can not wait for the signs saying Brother Can You Spare Me A Dime.  How we forget history and the warnings of the future.  So Let It Be Written.  America most go through pain and suffering before they will come to their senses, they are not smart of enough through their Union run educational system to know any better.  It's just a shame and sin that it has to come to this.....
Good Luck to All of the Hard Working Americans!!!!!!! 
Nov 7, 2012 5:46PM
avatar
Someone Shut the #uck up and do some work.

You are the same person who predicted that Romney will win, so if you were wrong then,you are wrong now.

Accept our Democracy Shut the #uck up and be positive and do something you whining bitch.

That's an advice for Congress also John Boehner has to work with the President on passing a Budget, so it's time to stop being Bitches and it's time put on "Los Pantalones".
Nov 7, 2012 5:46PM
avatar
Thank you Obama.  You think the country is divided?  Your policies are bad for business and the market is showing it.
Nov 7, 2012 5:46PM
avatar

HEY---HEY, People that get free stuff don't care about stocks. Someone, PLEASE, pass me the Kool-AID

 

Nov 7, 2012 5:46PM
avatar
Look out!! The sky is falling!!  Oh wait, it isn't.

Nov 7, 2012 5:45PM
avatar

I WILL NEVER VOTE FOR A MORON MORMON WITH ALZHEIMER
Nov 7, 2012 5:45PM
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The first of my "I told you so" comments for Facebook! 
Nov 7, 2012 5:44PM
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Road1240 said:  Under Ronald Reagan the percent of people that relied on some form of Federal Assistance was at 29%. Under President Obama that number is now 49%. 

When Reagan took office, There were Millions of Great  Manufacturing Jobs, Union Jobs,  for middle class that have since been sent to to CHINA .......many of these Jobs have been replaced with much lower paying jobs down to minimum wage... For example.Rick Perry of Texas has created Millions of minimum wage jobs which require many to need Food Stamps, government assistance to survive...

Corporate Greed is the problem.....Union busting that started under Reagan has greatly hurt wages for the middle Class......

Look no farther then APPLE.    They employ 40,000 in the U.S.A and 400,000 in CHINA for MAX PROFITS,   Good or Great is no longer good enough for these Modern Greedy CEO's.....

A lot of these 49% you call Freeloaders are WORKING CLASS AMERICANS who don't make a LIVING WAGE......
Nov 7, 2012 5:44PM
avatar
IDIOT MORMON MORON ROMNEY LOST

DONALD TRUMP AND OTHER RICH CORPORATE CEOS ARE UNHAPPY.

TO THE HELL WITH YOU RICH CORPORATE CEOS
Nov 7, 2012 5:44PM
avatar

To the 47 % that's on the 'dole' ? I & my peers will be pushing for you to return to the work force. SSA has the provisions for you to become self sufficient without jeopardizing your cash benefits until you reach the break even point in which you no longer need them.

 

So get ready- here it comes- I bet you didn't think about that concerning Obama's job's plan.

Now, its time for YOU to get up and go to work !

Nov 7, 2012 5:44PM
avatar

I took all of my savings out of the bank, and stuffed it in my safe. This administration will be watching anyone with 10K or more in there bank accounts. 'Betcha they tax it to help pay for OmamaCare.

 

BTW, I wrote in Big Bird for prez. At least he has cool hair.

Nov 7, 2012 5:43PM
avatar
Maybe not fun, but interesting anyway...
Nov 7, 2012 5:43PM
avatar

Here I am, a long time Florida resident, and am really embarassed of the clowns who can't count the ballets!

We are the only State in the union who can't seem to get our counting act together, we look like a bunch of bafoons!!

Florida, and you, Guv Scott, you make Florida look like a fool!

GET IT RIGHT! 

Nov 7, 2012 5:43PM
avatar

It does not appear to me that any of the posters here have taken any kind of economics lessons. While you all blame the freefall of the stock market on the poor i.e. (those with their  hands out) it is frightfully honest to observe that they have no money to play. It is all in the people who grew up cheating at Monopoly that are withdrawing their money. No Evil big guy to back????????????????????? 

Nov 7, 2012 5:43PM
avatar
So if we can't win the election by voting according to the stupid voting rules, we'll vote by pulling our investments out of the market. No confidence in B.O. Abolish the electoral college and go by simple majority. One citizen, one vote.
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