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%|
For some of you that don't follow any Historical charts or Financial scenarios...
May have found reasons for a selloff today...
I actually expected a possible 300-400 pt drop...And then a mild recovery back to only 125-150 down.
So much for the retrace back up...But, let's wait a few days or a week or so.
There were some buying opportunities today....
And where is CGT1, was he a paid poster also.....??
How the stock market has behaved the day after recent presidential elections:
— Nov. 5, 2008: Optimism about an Obama presidency, which had fueled a 305-point rally the day before, gives way to postelection nerves during the financial crisis. The Dow Jones industrial average falls 486 points, more than 5 percent, to 9,139.
— Nov. 3, 2004: Wall Street celebrates the re-election of George W. Bush with a solid rally. A concession by John Kerry ends fears that the election would be fought in the courts. The Dow climbs 101 to close at 10,137.05.
— Nov. 8, 2000: A choppy trading session amid extraordinary political uncertainty. The postelection fight heads for Florida, and the Dow falls 45 to 10,907.
— Nov. 6, 1996: Voters deliver two more years of divided government, re-electing President Bill Clinton and returning Republicans to control of Congress. With the economy humming, that’s fine with investors. The Dow jumps 96 to 6,177.
— Nov. 4, 1992: Investors, having bid the market higher for a month in anticipation of a Clinton victory over President George H.W. Bush, cash in. The Dow falls 29 to 3,223.
— Nov. 9, 1988: A Republican victory fails to rally the market, and investors focus on problems for the new administration, specifically the trade deficit and a budget gap. The Dow drops nine to 2,118.
— Nov. 7, 1984: It may morning again in America, but something less than bright sun shines on Wall Street. The Dow falls 10 points — the equivalent of about 115 points today — to 1,233.
Must be dropping cause the companies that sell stock know we are ****ed fior thge next 4 years, thanks to all you idoits in the eastern states, CALIFORNIA AND A FEW OTHER TARDS
Hold on to your ankles America we ****ed ourselves AGAIN
What a bunch of flippin cry babies. The fact is, policies going all the way back to Reagan helped to tank our economy - can you say "deregulation"? I lost a job i'd held for 11 years on the day President O'bama was elected the first time, a job lost under the Bush administration - thank you very much. Four years later and myself and family are all doing much better than we were before, own a home, cars for every family member, jobs for every family member, college for the kid so for all of you who think that nothing but a bunch of free loaders voted for the President, everyone in my family voted for him as well as everybody I work with except for one.
Four more years of blaming someone else. Lets see.... Bush or will it be Congree this time. This guy cannot LEAD, cannot create partnerships across part lines, and he was re-elected??
Hang on folks.... its going to be a long four years.
Well, when you have good companies plunging and a 20 year view, it will be time to buy.
Me, I have 22,500 that goes into one retirement account each year, with 50% being overseas---Mutual funds. The other thing I have is a 8,000-9000 SEP that I will be investing in stocks such as Phillip Morris, Coke, etc. I will be starting to put my next deposits into that next April, when the smoke will have cleared a bit. But Phillip Morris has NO EXPOSURE to US markets, and my dividends will be protected in a tax deferred fund. Maybe some British Tobacco, too, hmmm....
Anything else I can invest for the next few years will be going into Gold and Silver. No doubt under an Obama administration things will NOT get better, as they never do under socialists. Proof 70 coins of gold and silver should do well. As my wife puts it..."with this idiot in charge, it is a certainty that Gold and Silver will go up."
==Congratulations Tea Party Patriots, It worked, we now have the Liberals right where we want them. In 2014 the Country will be begging for change and we will then gain control of the Senate and House.....then...
When 2016 arrives with the Country nearing a Civil War and in total economic ruin.... we will disregard the Republicans and establish a independant Tea Party Platform for President.
This has saved us at least 4 election cycles and will establish a US Constitutional Government that was created by our Forefathers......cheers.============================
YES HIS A DRUNK BUT HIS OUR DRUNK.
WALL STREET is deliberately short-selling in order to make a huger profit on the last rally of the year. This kind of activity should be investigated and the initiator punished. Maybe also an angry reaction by Wall Street to four more years of honest oversight of their shady deals by the Obama administration. I believe in our President and I double-dog guarantee you this stock market will be up huge in late 2013 through 2015 because of Fed action and President Obama's policies. Can a budget deal be worked out by December 14th? Who cares. Either way, Republican's defense stocks are facing a mandatory $1 trillion cut in January. This is what needs to happen. We need to keep cutting the fat off the miliary-industrial complex until none is left.
Romney was right when he said it would be an uphill fight because 47% of the population is depending on the rest in some fashion. Now the Republicans have got to hone their message for the next election to persuade more women and hispanics to their side.
Unfortunately it will be a long four years until the Republicans have the chance to field another canidate for president. In the meantime, it will be a rocky ride on the stock market. The good news is that the Republicans control the House....................however, they need a very articulate spokesperson to combat Obama..................................
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[BRIEFING.COM] S&P futures vs fair value: +7.40. Nasdaq futures vs fair value: +14.50. U.S. equity futures trade modestly higher amid upbeat action overseas. The S&P 500 futures hover seven points above fair value after climbing to highs after the start of the European session. That is somewhat fitting considering Europe, and specifically Scotland, will be in focus this evening with the referendum on independence taking place at this time. Referendum results are not expected until ... More
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