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 6:36PM
avatar
Is this the new beginning?  I'm from Texas, don't blame us for Barry's next four years of failure.  This one's on him, he can't blame Bush anymore.  "Four more years,"  what a crock.
Nov 7, 2012 6:35PM
avatar
This is clearly related to the total dumbing down of America to the point they re-elected someone with a proven loser record.  America has become the epitome of stupidity.  It's time to divorce the liberals and divide the country.  They can then be responsible for paying all the welfare since liberals are the only ones on it.
Nov 7, 2012 6:34PM
avatar
What all the people who have any money should do is buy a very large piece of land in another country and start over. f___ the USA, which is no more, or soon will be over. Minumum buy in $500,000 buy in for each family ,( just to keep the riff raff out.), We'll call it  "NEW AMERICA." Once all the people who pay taxes to support all the dimwits are gone, the US economy will collapse pretty soon, as there will be no money for handouts or much of anything else eventually. These bums will then move back to their origin country or just starve to death, I don't give a sh__ either way.When the Gov finally collapses, we move back in and put the country back the way it should be.  Free from freeloaders and bleeding heart liberals, unions and everything else that has ruined this country.
Nov 7, 2012 6:34PM
avatar
weren't you all supposed to move to Canada? Please do and let us get back to building this country again the right way...
Nov 7, 2012 6:33PM
avatar
How did that old Toyota song go?...You asked for it, you got it...OBAMA
Nov 7, 2012 6:33PM
avatar
How did that old Toyota song go?....You asked for it, you got it.....OBAMA
Nov 7, 2012 6:32PM
avatar
Bottom line...Obama...dummycrats win...America - LOST Big time!  Good luck all you career welfare mammas and papas...your day of judgement is coming too.  Once us hard working middle class folks have to declare bankruptcy, you won't be getting your food stamps anymore!!!
Nov 7, 2012 6:32PM
avatar
What a bunch of twisted d-bags posting here!!! My goodness...racists, bigots, ignoramuses. What a motley crew!!! 
Nov 7, 2012 6:31PM
avatar
u capitalistic monkeys, u live off deregulation bc ur own kind live 2pillage natural resources & anything honest and true. the native americans shouldn't have helped ur pilgrim ancestors in their recession. u'll all b d 1st 1's smiling when ur markets start rebounding. u r d minority and all ur money cant save u. u choose 2 criticize, why dont u help like u did w/romney, all that money u lost ur trying 2 regain by making the market suffer. &english is my 2nd language, & uknow what im saying. unless ur really that dumb
Nov 7, 2012 6:31PM
avatar
Go back to sleep...! Keep losing money...it is good...Buy HIGH and sell Low...!!! Keep working for free...!! The puppet masters love that..!! How much did you lose today? You favored their gods....like Mardock and the other fear based demons when you sacrifice yourself...Slavery is good...!!Buy using credit...!! Get into debt...!!!  Spend more than you make......!  Now go back to sleep...!
Nov 7, 2012 6:31PM
avatar
Hmmm.. the last time I looked the stock market was at a 4 year high..  Up each of the last 4 years under an Obama administration.   just saying.
Nov 7, 2012 6:30PM
avatar

If this dive in the market is because we elected Obama, was the rise over the entire past year due to the possibility that Mitt was going to be elected? If so does that mean the Republican Party artificially manipulated the market to rise and fall with based on the course of the election. We if that's true why don't they just manipulate it up again and make us all rich.

Nov 7, 2012 6:30PM
avatar
Mitch McConnell said today " Our number one Priority will be to make President Obama a two term President "
Nov 7, 2012 6:30PM
avatar

stock going on sell for black friday hey when the get cheap enough buy there alot of companies in the dow that are making money ex. cat and other companies too go on sale before christmas like apple then there earning come out next quarter and youll be wishing you bought now in november im an elliotician dow going to 12000 previous pullback then it will explode youll wish you bought right now its normal for pullback like every year last year it happened early ended in oct then went up well anyways youll see

Nov 7, 2012 6:29PM
avatar
This small downturn is just the start of what is coming. The rise from early 2009 has been nothing but a bear market rally. 

Before this is over, Obama will regret winning re-election. 

Barack Hussein Obama will become known as Barack 'Hoover' Obama......at best.
Nov 7, 2012 6:29PM
avatar

Bush took office - Dow 10,587

Bush left office - Dow 7,949

Obama took office - Dow 7,949

Today - Dow 12,932

 

I'm sorry, who is better for business? I guess money does make people stupid.

Nov 7, 2012 6:28PM
avatar

>>Canada is looking real good..<<<  

 

(slap on forehead)...  Obama's brand of socialism isn't good enough for you?  You want even more of it?

Nov 7, 2012 6:27PM
avatar

Word to Jay-Z and his wife:

 

Why don't you get two some class, bitches? Freaking racists.

Nov 7, 2012 6:27PM
avatar
So many people here know how to fix the country, and yet you're just sitting here on your lardasses and commenting on news articles. Maybe you're the problem since you have all the solutions and yet aren't doing anything about it.
Nov 7, 2012 6:27PM
avatar
The grinning multitudes of misinformed voters will soon realize that they will be required to pay the piper for the next four years and they will blame the last president. Well the last president is directly responsible for this and knew that these voters had no political savvy. There were tons of information poured down the Mass media pipeline to their clueless minds and largely ignored. Starting the next four years will be an eye opener and when they ask who reelected this bozo  just look in the mirror
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