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%|
Over half the voters in yesterday's election cast their votes in favor of President Obama.
Just because someone doesn't agree with you does not mean she/he is dumb, evil, socialist or whatever terminology you like to use.
You do not believe in our nation. Even if President Obama were a boob, he will NOT be able to ruin this country. Our country has survived some BIG election mistakes (from both parties) in the past and they did not ruin the United States. Our government will endure and prosper in spite of who leads us.
You apparently don't believe that the US government system is the best in the world and is built to survive as it has for more than two centuries. Do you think that the only way the US can survive is if everything is set up and run as YOU think it should be? WOW!
You aren't REALLY a patriot!
I challenge each of you who are making such outrageous and disrespectful statements about President Obama to print out the comments that you and others wrote below and then review the comments after one year.
If you are honest enough to accurately compare the situation in one year with what you are saying now, you will learn something.
i'll tell you what our country needs to do. Every person in the US pay a flat tax. 17% and do away with all tax right offs.(even for companys) Put a tax in place that would make it cost more to pay over sea's company to do our work.(then what it would cost here)
Give everyone . even the rich child care credit. Just so the the rich cant say they are getting a free ride. Cause now they will to. Even give them food stamps. like me. 15 dollars.. haha. What a joke that is. End all Tax breaks. So if you make a million then you pay 170k in tax., Too bad. I don't feel bad for anyone making that kinda money. If i have to pay 17% then why can't you. end all tax caps. Thats what needs to happen. Stop these companys that make billions of dollars a year. Start fines that would make them want to pay the employees better. Why should we give our lives for you. It's about time you pay or close. Just remeber. Someone else will do it if you don't.
Now you will get to see how it feels to no be sure how your future will look. cause maybe someone will walk in and take you out.
Welcome to Our world.
May only the smart and not greedy win
Well of course the stocks plunged... Any smart investor would have seen that coming a mile away.
Take away the rich man's candidate, and you see just how much impact the wealthy have on our economy. You also see how much impact taxing the Sh!t out of them might change the economy.
Message to the wealthy. You can't buy your way into the White House. That is why your candidate failed. Had you let him run on actual republican values, and not a one-sided coorporate greed campaign, he most likely would have won. Unfortunately, people saw right through it, and "the people" put his a55 back in his place. Obama, unfortunately, isn't much better. I wish we had a true candidate to vote on.
stocks plummet due to fear, but Hey obamas supporters still will receive their checks
You know.. It is sad to see how you sorry A@@ rich people are. You know what. I'm not happy he is in office, but I can say. I hope all you Take that gun you have and show your true self and pull it on your self and end it for us. I love how you say of we get taxed then pass in on to them. You know if i started seeing that. I just would not buy anything you make or own..
I don't feel bad for any of you? It's about time the Rich get poor. And enjoy the stuff the poor do. for once in your sad life. The only reason i hope for a 1932 again. Is there will be alot of us and a little of you and alot of you killing your self. Which opens doors for us.
How could you of all people hope the world ends. The rich and greedy would end up in hell 1st from what i have read in the book.. Im not sure your going to win here or there>>>>> hhahahaha.. I hope it keeps on fallin.
I'll get my grill ready so i can cook out in front of flo-met and when they all get walked out and closed.. Im going to make sure they know i don't miss them,or need them.
Chris Van Hollen and Elizabeth Warren in 2012 & 2016!
God bless America!
Those people called corporations lost yesterday.
As it should be!
God bless America!
Anymore it seems, the worst thing you can have in America is a job. Wonder if the Obama idiots have thought about what is going to happen when the people who don't have jobs surpass the ones that do. Back to work free loaders!
And since when in America do we punish people for being successful? I'm far from rich, but hey, if you worked hard and played your cards right...good for you! Why should you have to give away your success to people who do nothing for it?
"We're gonna ask the rich folks to do a little more!" Why don't you ask the poor ones to do something?
I'm in the middle of the middle class. Don't tax the rich! Let them go spend their money! They buy the products and services that the rest of us make and sell. Then we all do better! Get it Obama?
Nancy Pelosi Logic:::: I guess we'll just have to elect him again to find out what he's REALLY going to do .......
Expect the worst for the economy. With all the talk of "vote the bast#$rds out", we end up with the exact same political system we had before.
Once the middle-class and 1-10%'ers have been tapped out for paying welfare to all the Obummer supporters, then what?
This election surely was the death nail for America.
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- The dollar index sold off this morning, which gave a boost to the precious metals space
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- In current trade, June gold is +0.4% at $1289.30/oz, while May silver is +1.2% at $19.67/oz
- Natural gas has been in positive territory all day so far and was modestly higher just ahead of inventory data
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