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 6:58PM
avatar

The sheep(le),  have spoken.

Now the rich will be a little more poor.

The rest of us will be a lot more poor.

That's what happens when half the people are clueless about the laws of economics.

Nov 7, 2012 6:56PM
avatar
No one can force wealthy, educated people to keep their money in a "guaranteed to lose in the long run" market......this is simply how they got wealthy in the first place......three ways to work 1) physically ...with your hands and back. 2) Using your mind after a decent education (this creates wealth much faster) or 3) working at getting someone else to take care of you while you don't contribute anything.  (Government Job or Welfare)  
Nov 7, 2012 6:54PM
avatar
What a bunch of racist bitter old men. I did not vote for him either, but do you really think the giant turd on the other side was going to do you right?! Grow up boys, this is all smoke and mirrors. Look at the quality of food, bankers run amuck, FED in charge, Bilderburgers pulling strings, and all you do is bitch about it on a post. Get off your **** and realzie we are going down because that is most liekly the plan. Poison in your water, food and medication, and now all will fall back asleep while the agenda explodes in December. Watch what happens. Take your flu shot and go home to watch FOX news tell you what to do next.
Nov 7, 2012 6:54PM
avatar
Ok, this bodes well for our choice! LOL
Nov 7, 2012 6:53PM
avatar

Well the stupid people that always have their hands out for the "gubments" to take care of everything re-elected the bone head so....lets put the blame where it is due....the low life libtards who want to bankrupt our once great nation the way they are already morally bankrupt!

Look for people to get tired of this garbage and start telling our elected employees what we want done for once instead of the other way around!

 

Nov 7, 2012 6:52PM
avatar

Are you people slow or what stocks go down today over "worries" so they can go up more when the next QE goes through.It's just the rich getting richer would happen if Romney won too.

Nov 7, 2012 6:50PM
avatar
What a bunch of racist angry old men.
Nov 7, 2012 6:50PM
avatar
Has anyone seen Jeff, MisterC, Crazy, ABS, or any of the other whacks?
Nov 7, 2012 6:49PM
avatar
Elections and stupidity have their consequences!
Nov 7, 2012 6:49PM
avatar

What a bunch of whining doomsayers....Gee I can't tell which candidate all of you were backing. The GOP'ers created this mess first under "W" and then with the most recent budget debacle. Their inablilty to COMPROMISE was the reason for the first downgrade of our nation's credit rating and the fiscal cliff is looming ahead, because of their inability to govern. O's approval rating tops 50% and he won this election COMMANDINGLY. Hmmm... and what is the Republican Congress's approval rating? Has it skyrocketed to 20%?? Too bad we didn't fire more of the GOP'ers in Congress in this election cycle. America has spoken! Only you guys think America is too stupid to know what was said!

Nov 7, 2012 6:49PM
avatar
Looks like all the Wall Street RATS' are bailing with there cheese?
Nov 7, 2012 6:47PM
avatar
Just don't understand, if these people can foresee this very bleak future how come they did not see that Obama would win? Must be selective clairvoyance.
Nov 7, 2012 6:47PM
avatar
all the sore losers must have stayed home to wait for this to happen just to write about it...of course if the flip-flopper got the nod, all our stocks would have shifted to international, right? 
Nov 7, 2012 6:46PM
avatar
What can you say. He was re-elected by the 98% vote of the dumba** Blacks and Mex's (most probably illegal and paid off).
Nov 7, 2012 6:44PM
avatar
Big Birds alive and Bin Laden is dead, it's a great day to be an American.
Nov 7, 2012 6:43PM
avatar
OBAMA HAS WON.....LIVE WITH IT!!!!! WHAT ARE YOU GOING TO DO, TAKE YOUR MONEY AND PUT IT UNDER YOUR BEDS OR PUT IT IN AN OFF-SHORE BANK? WHAT ELSE IS NEW........
Nov 7, 2012 6:42PM
avatar

in order to rip through the previous high of 14000 the dow is like a trampoline it goes down fast to bust thru a previous high or resistance ceiling once thru 14000 release the bulls

so keep talking about the end of america and financial crash and end of world **** cause the more it said the market will continue to rise love to make money from the fear and when you decide its time to buy cause the budget is balanced and the market went to 20000 or whatever and its a nice sun shine day i will sell  so keep being negative i love it

Nov 7, 2012 6:42PM
avatar
Anyone want to know the difference between Mitt Romey and Barrack Obama...Mitt is a Mormon...Obama is a MORON!
Nov 7, 2012 6:41PM
avatar

Republicans pledge their elegance to Grover Norquist.

Democrats pledge their elegance to our flag and the American people.

This is why I voted Democrat for the first time, and until this changes, I will continue to vote Democrat, it's un-American to do anything else.

Nov 7, 2012 6:41PM
avatar
I believe all the nastiness is uncalled for.  You must be forgetting about the recent strides the market has taken just because we are having one lousy day!  I am an Obama supporter, and I do have much vested in the market.  I think we all need to settle down a bit and stop being so nasty, both to each other and about the President.  Remember that there are some shrewd investors out there who are Obama supporters, like Warren Buffett.  All is not lost because some have decided to pull out today.  I remember what my portfolio looked like in 2008 before the President took over--not a pretty sight!! 

Remember that we are all Americans; not just some of us. 

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