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)










 

1626Comments
Nov 7, 2012 5:07PM
avatar

OMG are these commentators all related? This is not a result of a president being reelected. This is a result of paranoia and it will destroy ya. But alas, a fool and his money are soon parted. Go ahead, sell now while it's low then buy when it's high. Isn't that the way geniuses? The rich will gladly take your cheap stocks. Paranoia, bigotry, and cowardice stifle creativity. Creativity is what is required for success and progress - be it personal, political or as an influence on our nation. If you are afraid the ship is sinking, then jump off like a coward into the abys. But if you have the courage to be part of the solution then do what you can in any small way. The worst thing you can do is be a complaining cowardly monkey and jump on your captain's back every chance you get. You fearful brainless monkeys are at fault.

Nov 7, 2012 5:06PM
avatar
Four more years to destroy what he started.  Two years and I'm guessing the 47% will become the 75%.
Nov 7, 2012 5:04PM
avatar

what does the president have to do with the stocks.. you guys have no one better to blame .. if you guys know how stocks work this is bound to happen its not obamas fault he doesnt run the stock companys 

Nov 7, 2012 5:04PM
avatar

It took 8years for Bush to screw it up,  You can't fix it in four

Nov 7, 2012 5:02PM
avatar

How many of you idiots will it take to say something negative in a time of such joy and hopefulness!!

 

Just sit back and watch as the country recovers. The whole world will reap and realize the fruits of his labor. This is exactly why you should have voted for Obama. This liberty that you enjoy and take for granted should be used the encourage not disgrace our nation. Every American needs to do a self examination. Then take a long look at what is best for this nation "long term" not just while your stocks are tanking. This man is all about long term solutions. And yet most of the post I see here are concerning your inability to short-sell in the market. Please get a life.....get over yourself and become a little concern with the well being of our country, our troops and our recovery!  Mr.H 

Nov 7, 2012 5:01PM
avatar
You idiots who think that Obama had anything to do with the markets need to live elsewhere.  It is a fact that no matter what happens in the world the speculators see an opportunity to make tons of cash, so they sell out when it opens and wait until it tanks and then buy all of it back and pocket a fortune.  Heaven forbid that the Queen of England should fart in public.  That in itself could cause a world wide epidemic of stupidity.  Obama gets all the blame for the way the economy is, but we all forget that Bush is the one who put us there.
Nov 7, 2012 5:01PM
Nov 7, 2012 4:58PM
avatar
TE Connectivity to cut 10 percent of it's workforce, they announced today. Would that be a result of a problematic election or just a trimming of the fat leading to higher profits? Surely not because of Obamacare and the paperwork just not being worth the grief! 5000 hit the streets in the next 3 months. 
Nov 7, 2012 4:57PM
avatar

Wow, there's more weeping on here than a Boehner speech. To paraphrase Roy Scheider in the classic 'Jaws", the Republicans are gonna need a bigger tent. 

Nov 7, 2012 4:57PM
Nov 7, 2012 4:56PM
avatar
as of 2:30 pm today nov 7 ... gas is up .25/gallon.... maybe you obomber fans could ask your savior about that
Nov 7, 2012 4:55PM
avatar
What a joke...Did Wall Street think the fiscal cliff would just disappear if Romney was elected
Nov 7, 2012 4:55PM
avatar
Thank God for Cable, with so many choices I don't have to see his face EVERYDAY on T.V. screens.
Specially if you add Pelossi and the creepy old man from Nevada with his 'child molester' personality.

Nov 7, 2012 4:55PM
avatar

Apple down 20% since Sept.

I wonder who it was who said it would go down back in Sept???????

I wonder who said I was stupid and wrong

F U    ABS

Nov 7, 2012 4:51PM
avatar
Everybody needs to calm down....damit.
Nov 7, 2012 4:49PM
avatar
Are you 1% ers having amnesia, or did you not see the DJIA gain over 60% since he took office? Go ahead, put your blinders back on - use a couple of $50's...
Nov 7, 2012 4:49PM
avatar
47% don't pay taxes, (IRS says so), 47% are unconditionally Obama supporters. IT MAKES SENSE,
just keep borrowing money from China, and degrading our country.

Nov 7, 2012 4:49PM
avatar

the market had thought that romney was going to win as how can this country be so stupid as to re elect the worst president we have ever had. All these losers wanting handouts and who want to scam the system.

we need a real leader who can run a country not the moron we have and his followers looking for handouts. I for one will not call him my president and will do my best to make sure he cant get any more of his crooked plans and freedom steeling laws pased or enforced. screw this crap and whomever voted for this piece of crap.. I think trump has the right idea and in fact I will be narrowing my company buying to others who believe in freedom and the removal of obama

Nov 7, 2012 4:47PM
avatar

I love it, not only are we are screwed but now we get to wait before we can tell the other 5 million people "see see what you did now are you proud you voted for him, see the mess we are in" way to go America let's go ahead and become a socialism country because you know that worked oh so well for other countries. I mean Wow, simply Wow how ignorant people can be to see that facts at hand and yet somehow they a brainwashed by the rhetoric I mean I watched his headquarters and it look liked everyone just finished drinking the cool aid and were in a completely daze. Way to go America thanks for screwing me I really appreciate it. No seriously thank you!

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