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.

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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

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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



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Nov 7, 2012 2:51PM
Nov 7, 2012 2:51PM
Speculators, Manipulators...get ready to say GOODBYE to your thieving days of robbing the cookie jar are OVER!!
Nov 7, 2012 2:51PM
If you can't buy the country then just suck it dry - the wannabe despots are now conjuring up their vengeance with little regards as to its outcome or the effects it has on the people, the country or the world. Big money smells blood and is beginning the transfusion from America to themselves. "Capitalism is the legitimate racket of the ruling class" - A. Capone
Nov 7, 2012 2:50PM
When the money finally runs out and you recipients decide to break in the home of this hard working man you had better have a bullet proof vest on.
Nov 7, 2012 2:50PM
 This election was important because it determines who will win in 2016 as well. The economy was going to improve no matter who won thanks to a housing rebound. Problem is, he who is in charge will get credit for a 5.5% unemployment rate four years from now
Nov 7, 2012 2:48PM
This in my opinion is a republican revolt. Slice it anyway you want, but it is. Stocks just don't fall on their own; people get pissed and show defiance. People in charge of the exchange should have said, this changes nothing; we still work as hard as ever to grow the economy. Did anyone notice that when the healthcare bill was upheld, stocks dropped sharply? I lost my bonus and my raise because my job (republican holders and owners) didn't like it. We were promised 1,000 dollar bonus because we met sales, now that will probably change too. Damn Republicans...stop being the problem and be the solution. 
Nov 7, 2012 2:48PM

Until the real conservatives wrestle the republican party away from the extremists, expect to keep getting spanked in the national elections.  What ever happened to the "Big Tent"?  Now the Republicans have become the party of racists and misogynists.


You lost the minority vote and the female vote because you govern from the far right instead of the middle, where the majority of Americans fall.


Keep crying, konservatives.  Your tears and bile is like Gatorade for replenishes my electrolytes.

Nov 7, 2012 2:48PM
I called it a month ago...FROM Who was going to the Dow turning down today...!! Now get ready for the slaughter.......All the money that was paid towards elections has to be recovered...So get ready to hear the sucking sound form your 401K and other investments your paying for all of it. As if that was not bad stagflation are the next economic topics as the economy takes a disconcerting downwardly drop of 4% - 6%...This is just the beginning!  Next is the Congress is unwilling to negotiate tax cuts, tax hikes and the Fiscal Cliff....These distraction are just entertainers in the NWO BIG PICTURE while they continue to chip away at the big prize. ALL of our real free resource WATER....GMO...FARM LAND and SEED PATENTS....all this grabbing goes on behind the scenes....Get ready for a lot of strange AGENDAS hacking away at our rights and sovereignty WATCH FOR A FALSE FLAG NEW bold attempt to destroy and limit our 2nd amenment "Right to own guns and defend ourselves" ...AGENDA 21 to invade our cities CORPORATE AND BANKSTERS TAKE OVER and the Dollar Collapse......! GET READY..!
Nov 7, 2012 2:48PM
What a crock...the DOW tanked because wallstreet doesn't like the election results
Nov 7, 2012 2:48PM
Hope bam bam beefs up his security, got a feeling there may be some shots taken...
Nov 7, 2012 2:47PM
Sad day for America.... and for the world....another four years of incompetency and bad decisions...
Nov 7, 2012 2:46PM
Of course all the doomsayers are blasting Obama and hollering about the U.S. becoming another Greece and/or Spain.  The election yesterday to some is a prelude to the Mayan Calendar Doomsday script, right?  The present day Mayans are laughing at all the dopey gringo new age types who think the calendar predicted The End.  We have Alsatian (French-German) relatives in their 90s who are still here although to many, 1945 was Year Zero, when much of Germany was bombed and decimated by us, our allies and the ruthless Russians.  
Sold off my stocks 2 days ago. Come January 1st, it`s going to get real ugly, No matter how much money they print there won`t be any free rides anymore.
maybe it is the end of the America the way we once knew it.  It all seems like a bad dream. i was hoping it was a bad dream.... but I woke up today and it is real. And it is really bad
Nov 7, 2012 2:43PM
You phucking libtards don't have a clue of what you just did.  Electing a muslim terrorist for 4 more years, we are all phucked...
Nov 7, 2012 2:42PM

fiscal cliff = people condemn this country to suicide by Obama.  You can't reduce the deficit by $207 billion while adding $1.8 trillion to the national debt in the same time period and grow the economy.

Debt won't grown an economy no matter how many times Obama and Bernanke claim it will.

Nov 7, 2012 2:39PM
For a few pieces of silver (what he gets from taxing the rich more) he will veto anything else and we go over the cliff and cut defense spending and we are where Obama wants us to be.  Vulnerable.  Should the world change currency standards from the dollar we will crumble as Greece.
Nov 7, 2012 2:38PM
I was wondering what spin would get put on today's stock drop.  Couldn't have been the outcome of the election...
Welcome to dark, dismal 4 years. Democracy is over. Now I guess we'll learn what survival truly is!
Nov 7, 2012 2:37PM

Is not Congress immune from insider trading?  They set the tone for the country. 

There are some serious cuts coming and they already know where to put THEIR investments.

But they ain't tellin' you hillbillies a damn thing...hahahahahahahaha.

You have the fox guarding the hen house and all you do is bitch about the guy running the farm...


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