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)










 

1653Comments
Nov 7, 2012 6:11PM
avatar

Yep, you have the gay's, hispanics, and the brothers who voted for you cause your black. You have the teachers who only care about themselves and believe they are the most important people in the world and now I can't wait to see them loose their jobs and they should for being educated idiots.

Your going to cut the military and that will weaken the country. Not only that but wars have actually stimulated the economy in the past. No military machine no need for manufacturing of military items. Obama will eliminate God from the country and by the time he is done so will be our country, but at least the gay's will be happy.

Nov 7, 2012 6:10PM
avatar
Yes because a fictituous system of fake money based on hypotheticals and driven by mythics controlled by opponents to Obama that is now derailing itself based purely off illogical conjectures is somehow a direct sign that the world is ending.

It's not just  a convenient push by Republicans and Wall Street to try and make Obama look bad at all. Because they've never tried that before. It's not like the Republicans stated when Obama first got in office they wanted to see him fail and would do everything in their power to ensure that he did.  Mitt Romney being one of those same republicans in question.

Let's all panic that a system of pretend money with it's value being controlled by wealthy individuals who have everything to gain by working to undermine Obama and his policies as much as they can is suddenly dropping. Because these interests that have been pulling this since Obama got in office have  nothing to do with the state the country is currently in. EVEN THOUGH THE ECONOMY HAS BEEN STEADILY IMPROVING UNDER OBAMA. And that's a fact.
Nov 7, 2012 6:10PM
avatar
Another ecomonic failure due to the  Bush's legacy of spending     5 Trillion dollars on a non-productive war ? On a credit card !

Freedom ain't free, GWB

Because they hate our freedom., GWB

lol.


Nov 7, 2012 6:09PM
avatar
Of course, the low lifes in this country re-elected the POS.
Nov 7, 2012 6:09PM
avatar
A Sharp I agree.....Many Counties or the State of Florida...Should not be allowed to vote in any National Election....Especially when what? 30-40% was on early voting ?
Nov 7, 2012 6:08PM
avatar
LOL, still sour grapes.......Ever once think for a moment that this is a reaction to Boehner saying he's going to obstruct.......No . because your all b u t t  hurt.....LMFAO ....Crybabies.....It.ll bounce back tomarrow, but you short term suckers buy and sell your way to the poor house....I'm still LMFAO....BTW it was Wall Street that got us into this mess the first time.......Your probably in denial about that as well....
Nov 7, 2012 6:08PM
avatar
I don't know why all you people bash Obama.  He's been nothing but money in the pockets for stock investors.  6500 - 13000 Dow.  Please!  LOL Americans are short sighted with lousy memories..

Nov 7, 2012 6:08PM
avatar
Is anyone even slightly surprised by this? America just told the world that we are so stupid we will re-elect a complete failure to office. How long til the net Credit downgrade? I'm betting less than 3 months.
avatar
We all have a right and duty to complain and say whatever we want about ANY elected official --- HARDCORE.   Because they are politicians, they and their supporters have no defense and must take it -- ALL THE WAY.

I'll begin AND there is nothing you can do about it.

How many boys has that sorry dancing clown and his family in the whitehouse raped?

Nov 7, 2012 6:07PM
avatar
Don't worry folks,I'm sure Obama kept all the spinners who got this market 3-4,000 over what it should be in the first place.They might have to put in a little over time,but they'll have it spun,cleaned,wiped and all nice and shiny again.With a few of the magic words - re-adjust,estimate,FED,expectations,etc,etc.... this fly covered steaming pile of BS will be in the green again by next week. 
Nov 7, 2012 6:07PM
avatar
So this is Wall Streets way of punishing us for re-electing Obama!  Since they put so much money into Romney, they are pissed!  Just can't wait to hear what the businesses are going to do.  I have already heard about Boehner saying that they need to work together but no increase in taxes.  So in laymens terms, he just put up a road block for compromise!  Fool!  Hope he loses his job next time he is up for election!    Get along now little boys and girls!
Nov 7, 2012 6:05PM
avatar
As a 1%er ... I have the most to lose by Obama being re-elected. But, as a 1%er, I also have the means to shift my money into safe houses so that all the "entitlement" folks won't get a dime of my money. The reality is ... most of the high dollar people have already taken the same steps as me, so money will be flying out of the market and flying out of the country. I know ... since all my friends are all doing the same thing. As the money comes out of the market, it will continue to collapse and as the money goes offshore, there will be less and less taxes to pay for all of Obama's spending. So ... add this all up and you have a mess in the making!! But ... not for me. Obama's re-election will hurt the middle class and the lower income people more than anyone. Tyrone and Pedro ... just wait and see. Don't cry when your welfare check stops coming!!
Nov 7, 2012 6:04PM
avatar

Shoulda, Coulda, Woulda...will become the new slogan for all people who put Obama back in power. They get to watch America crumble on the Hope/Change and Forward campaign promises, and know  they are party to such a grave mistake.   MAKE NO MISTAKE, this Presidency will FAIL America!  :)

Nov 7, 2012 6:04PM
avatar
Wow...funny how you republicans can make something like this happen every time a Democrat gets elected and blame anyone but yourselves. Your the only ones with money enough to invest in other republican interests or any interests for that matter. Democrats care about society as a whole and realize the working man makes this country what it is and Democrats invest in that. Have no fear, you don't like to lose money so it won't be long before you're back on track! Get more Democrats working and you'll be able to reap your riches off the backs of the working man.
Nov 7, 2012 6:03PM
avatar
Under the first Obama term Wall Street has done very well. Look at today's drop as a buying opportunity. The next 4 years will prove to be good ones for investors. 
avatar
The presidential lame duck session has begun.  Now as the facts come out --- let's get the impeachment hearings on and torture that duck before the ax.
Nov 7, 2012 6:02PM
avatar
Well at least they can get stoned in CO and WA while they watch the remnants of the US go under water, that's worth it right? I dare say half the country has turned into gutless morons.....
Nov 7, 2012 6:02PM
avatar
What a joke. Obama's Presidency is his first real job.  He said the next four years will be better; for who?  And how could they be worse? He's a complete and utter failure that will put even more people on the tax payes backs, so in 2016 the liberals will even have more people to scare that they'll lose their freebies.  The financial markets can't stand a President who does not understand economics. 
Nov 7, 2012 6:02PM
avatar
everyone that wants to cry about all of this...... point is you voted and you lost.... it would be the same if Romney won and Obama lost...... don't complain because you lost. Everyone had the chance to vote, and more people voted for Obama..... take it as a loss and don't be a sore loser..... Oh and by the way just for your info before everyone start bashing me.... I didn't vote cause they all lie!!!!!!!!!!
Nov 7, 2012 6:01PM
avatar
Want to venture a small effort that will make a big difference in the long run and has nothing to do with politicians and everything to do with the Market? Next time you go to the store, look at the fine print for the word "China" on everything you buy. If found, look for a similar product that does not say China and buy that instead, or consider doing without said product.
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