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 4:46PM
avatar
I would like to take a moment to wish President Odumbo good health.  It's not that I care all that much about his health, it's simply more sickening to think about his #2, Biden the Clown, ever actually getting called up to run the show.  I guess things COULD get worse...shiver...
Good job liberal sheep...baaaaaaad sheep.
Nov 7, 2012 4:45PM
avatar
This is just the tip of the iceberg. As many have already said the same people that elected Obama hasn't got a clue about what really makes a country healthy and substainable. All they know is somebody owes me and I want it now. Romney being from a Corporate world had the solutions but it was soundly rejected as a threat to the population that now embraces Obamanomics. Capitalism is slowly dying on the vine and we are doomed as a country. Kudo's to China for all they had to do was wait us out and we'd give it away. Romney was doomed from the start cause he campained on the wrong message of self determination and personal responsibility. That worked in the 40,50,and 60's but not anymore.
Nov 7, 2012 4:44PM
avatar
Let me guess...Blame it on Bush!! Bush was responsible for the stocks tanking. Notice no Libs commenting...
Nov 7, 2012 4:43PM
avatar
Obama, said if reelected he would reduce the federal debt......well he lied again it went up again today by about $4 billion.
Nov 7, 2012 4:41PM
avatar
you watch your mouth! Obama is a saint! he can do no wrong! just look at all the good he did for the economy! *sarcasm*
Nov 7, 2012 4:40PM
avatar
I'm closing my business and going away with my money 'till  you know who is gone from the W.H.; I worked hard and honest to earn it to have a community organizer give to the leeches. Good luck to the fools who trust him.
Nov 7, 2012 4:39PM
avatar

Today's market plunge has nothing to do with Obama's reelection -  it is because of the Kolobian Battlestar that is circling our planet and threatening to rape all of our women because we denied their exalted one his place as the supreme ruler of our world....... My god people, either give it a rest or start the revolution,,,, WTF

Nov 7, 2012 4:35PM
avatar
Believe what you want - Obama created more jobs in 4 years than Bush did in 8 - and the growth rate of GDP was higher than Bush's.  But, believe what you want - the economy will take off in the next couple years, with or without you!!  GO OBAMA!!!!
Nov 7, 2012 4:34PM
avatar
Welcome to the new welfare state of America!  Americans will have to pay for the subsidized healthcare of Obamacare.  Hope everyone who voted for Obama will be satisfied when they see their taxes skyrocket.
Nov 7, 2012 4:32PM
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He said "you haven't seen nothing yet"...just wait 'till he borrows another 16 trillion from China.
Nov 7, 2012 4:27PM
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Wow, the forums are back open after the election? So, the media shutdown on discourse wasn't just conspiracy theory.
Nov 7, 2012 4:27PM
avatar
Just think. "the best is yet to come". I can't wait! And neither can my kids for that matter.
Nov 7, 2012 4:27PM
avatar
Economy?  Are you kidding!  The economy does not matter to an Obama voter, he will give them everything they need anyway, regardless of what cliff this country is heading for in the future.  Worst POTUS in the history of America and half the people in this country are just plain stupid.
Nov 7, 2012 4:25PM
avatar
The not so bright Americans have voted away their Liberty!!!


Nov 7, 2012 4:25PM
avatar
No matter what happens in the next four years it will be Bush's fault.  Now, how many parties can Obama have this term?  I heard he is going to join Bouncy during the half-time show at the Superbowl.  He's going to help out with "all the single ladies".   I'm sure he'll take a few strokes off of his golf game!!!
Nov 7, 2012 4:25PM
avatar
Billy Mack is a detective down in Texas
You know he knows just exactly what the facts is
He ain't gonna let those two escape justice
He makes his livin' off of the people's taxes

Bobbie Sue, whoa, whoa, she slipped away
Billy Joe caught up to her the very next day
They got the money, hey
You know they got away
They headed down south and they're still running today
Singin' go on take the money and run
Go on take the money and run
Go on take the money and run
Go on take the money and run
Go on take the money and run
Go on take the money and run
Go on take the money and run
Go on take the money and run
Nov 7, 2012 4:21PM
avatar
Once again US proved how idiotic we are just as we fools elected Bush for the second term. He was no where to be found during election.
Don't worry end of this four years cars in wind power. More Solindra for the rescue.
BTW idiots in CA voted a tax increase again and they were just jumping up and down when gas went up just a few weeks ago.
Some voted just because they got a new year greeting from Obama into their Facebook. These people should not allowed to vote and majority of women have no clue about economy or politics!
Nov 7, 2012 4:21PM
avatar

 

  I can and will invest elsewhere.

Nov 7, 2012 4:19PM
avatar
Half of you jokers commenting are broke as hell, but you want someone in office that was not going to help you in no kind of way. It's crazy how the poorest states in america can vote republican year after year and still be in the same position year after year, broke. What you don't realize is they're (republicans) policies are only going to help people that have money, not the ones that don't have money so for you idiots that vote republican, white or black you getting mucked in the worst way, and you probably gonna continue to get mucked in the worst way because you are voting on what color someone is and not what they want to do for the majority. Suuckersss.
Nov 7, 2012 4:18PM
avatar

Who knows, maybe 12/21/2012 will happen and Obama won't have to figure out how to actually fulfill all his campaign promises now. Okay, let's think positive here folks. The President will get all the credit and no one can accuse those pesky  darn Republicans for what the market is doing now. Remember, Obama promised he would take charge and be responsible for getting this country back on track if re-elected. I wonder which track he meant because it's looking like a downward one already. If this is a taste of things to come, we better brace ourselves, looks like a typhoon is headed our direction. And they won't be able to stick this on Bush, with Crazy glue or duct tape.There is a saying, when the corrupt rule, the people mourn.

 

 

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