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 3:26PM
avatar
stop shopping at Walmart and Target buying cheap China imports...buy local and watch the economy improve....sitting on FB bitching that you LOST...AGAIN...isn't going to help your life...Proud of Obama and the SMART winners who voted for him...
Nov 7, 2012 3:26PM
avatar
Fianlly some justice for the aholes that caused this entire mess like Mitt the Cockroach.  Why in the hell would anybody put those crocks back into office after what Bush did in his 8 years. It's really amazing though how the gerrymander House gets filled back up with Republican sharks from by their overpaid constituents. Oh, well Obama doesn't have to be a nice guy this time since he's not up for election in four years. It's going to be fun to watch the TP'ers face the fiscal cliff with it's automatic consequences. They really blew that lttle deal last summer. Now it's higher taxes for everybody or just the wealthy? How will they defend letting everybody get taxed more four years from now?  Bend over TP'ers and enjoy the party.
Nov 7, 2012 3:26PM
avatar
Welcome to "Forward" Obama style.   Hang on, it's going to be a rough ride.   Yee-haw!
avatar
Bbbbbbut, hey, they givin out free stocks too with the other Obama Free Stuff?
Nov 7, 2012 3:25PM
avatar
 Ah who care what you think, you lost. And with your logic skills you will lose again. 
Nov 7, 2012 3:24PM
avatar

Why are all you "investors" crying now?  You created this mess yourselves by not paying average working people a realistic living wage (thus crippling a consumer based economy) and then trying to multiply the money you saved (stole) by investing in ponzi schemes, which all  of you "investors" created to try to steal money from each other and poor trusting honest people. Most Americans would be glad just to have a job that will pay their bills and have no mercy on people who have the luxury to "invest". 

Nov 7, 2012 3:21PM
avatar
4 year Statute of Limitation on blaming the previous Administration!

It's all on Obama now! There's nobody else left to blame.
Nov 7, 2012 3:20PM
avatar

Economically illiterate president? What have you been smoking? Obama knows exactly what needs to be done to turn the economy around, and most top economists have agreed. The fact the economy has even started improving on a number of fronts says something for him, considering the magnitude of the mess he inherited, and with the stonewalling and obstructionism from a Republican Congress which no doubt has stifled better progress by this time.

What do think Bush/Cheney were? Economically literate?

Get a clue and think outside of your box.

 

Nov 7, 2012 3:20PM
avatar
Wonder how the Libs will feel when they wake up from their hangovers, and see the result of the election on the Market?
Nov 7, 2012 3:20PM
avatar

Dear GOPers,

 

You lost.  Get over it.  Time to act like adults and tossing your toys out of the pram becusue you didn't get your way is pathetic.

 

As for no skin in the game:  Look at yourselves in the mirror.  Working with the President and the Dems is the way forward.  The predictable tantrums and obdurate refusal to deal with reality spooked the markets. And predictably so. 

 

Mitch McConnell and his chronies should be ashamed.  The GOP was drubbed.  Their policy of obstruction will help noone and should be abandoned.  As the cliche' goes, the GOP will cut off their nose to spite their face.  You are a sad lot and will be left further and further behind - as this election shows.  Mocking our President and shooting insults merely lowers the public's view of the right and will continue to spook the markets.  The smart play, BTW, is to solve the fiscal cliff issue and THEN go back to your obstruction.  That way at least we all don't lose money - because last i checked, by greenbacks looked just like yours.  Heavens ... wake up!

 

 

Nov 7, 2012 3:19PM
avatar
Obama cant even keep his wifes spending in check. She spends so much more that any other first lady so how do those that voted him back in think he can keep the countries spending in check?
Nov 7, 2012 3:18PM
avatar

The Obama administration had to push real hard to make this re-election campaign work. If Obama hadn't been re-elected there would have been so many investigations and prosectutions for wrong doing from the Whitehouse down, including Eric holder and Fed Chairman Bernanke.

 

The sudden drop in unemployment is about to go back up to 10%, we will have $5.00 a gallon gasoline next spring and that mystery $30 Billion added to the GDP in October because of government spending will evaporate.  GDP will start going negative in January 2013 after this earning season and look for November and December holiday sales to be the weakest in years.  The working  middle class is going to start cutting back now and hanging on to every cent just for basics.

Nov 7, 2012 3:18PM
avatar
no big surprise-----the market at least still cares about where the money goes----and we are certainly headed for a grand ride on this one!
Nov 7, 2012 3:17PM
avatar

Sounds like the majority of these comments have been made by individuals who will never have the assets  to truly call themselves Republicans! 

 

Do you all still have "Romnesia"? 

 

Who do you think got us into this mess?

 

George Walker Bush.......that's who!!!!!!!!!!!!!

 

Did you all honestly think the nation would hand over the wheel to someone less intelligent than that punk president G.W.B????

 

Try for once, to see past your monied ways....

 

Put your anger to work and help find a solution!

 

 

Nov 7, 2012 3:16PM
avatar

Obama has created a substantial displacement for the Democratic Parties leadership and the Party no longer has any political acumen even in its insolent glory. The Party is in substantial trouble if the status quo continues another 4 years (and there really is no light at the end of the tunnel right now). Even now Democratic leaders are very fearful about the position Obama has put them in. Don't look for Democratic leadership to support Obama's policies and spending habits over the next 4 years (good luck Sandy victims; you’re probably on your own). Obama’s definitely a lame-duck in a lame-duck term. Suicide may be Obama’s best choice. He really has nowhere to hide.

Nov 7, 2012 3:14PM
avatar
Just sent my resume to Beijing. Getting a head start on all of those that the government supports.
Nov 7, 2012 3:14PM
avatar

>>>I really dislike this obamnation... but get this idot out of here who said assination is the solution<<<

 

Well.. that's what happens when you make a deal with the devil.  Are you really surprised that the creepy extremists in Republican party scares the heck out of the independant swing vote?  Come back to the middle and we can talk.

Nov 7, 2012 3:13PM
avatar
Speechless , just cant believe how stupid America has acted in this vote, the only thing even close would be to vote in nancy peloski. 
Nov 7, 2012 3:10PM
avatar
 THAT will teach you to poke the sleeping 47% with a stick, huh Mitt. NEXT time let sleeping dogs lie
 And if you are smart Paul you will never ever mention Ayn Rand again.  Might even want to burn her books. She just kind of , you know, sticks in the craw of the middle class once you get to know her
Nov 7, 2012 3:10PM
avatar
Wow, an article With a comments section.
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