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%|
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
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!!
HEY---HEY, People that get free stuff don't care about stocks. Someone, PLEASE, pass me the Kool-AID
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 !
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.
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!
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?????????????????????
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[BRIEFING.COM] The major indices continue to run, no doubt helped by some short-covering activity. It hasn't hurt either that the preliminary reading for the December University of Michigan Consumer Sentiment survey showed a sharp jump to 82.5 (Briefing.com consensus 75.1) from 75.1 in November. That is the best reading since July 2013.
A drop in gas prices, the continued rise in stock and home prices, and encouraging labor market trends have been positive influence for the ... More
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