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 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!

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
avatar
He said "you haven't seen nothing yet"...just wait 'till he borrows another 16 trillion from China.
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