Stocks slip on earnings worries

The Dow falls 36 in its third straight loss. Alcoa results meet Street estimates as a weak earnings season starts. Weakness in China, Japan and Europe are concerns. Boeing lands 2 big orders. Oil and gold rally.

By Charley Blaine Jul 9, 2012 12:44PM
Charley BlaineUpdated: 7:05 p.m. ET

Stocks slipped today but finished well off their lows on worries about a weak earnings season and continuing fears about economic slowdowns in Europe and Asia.

Japan reported that core machinery orders fell at a record pace in May. Chinese inflation fell to a 29-month low, also a signal of lower demand. The 10-year bond yield in Spain topped 7%, a level the government says is unsustainable.

Shares of companies that generate large percentages of revenue in Europe and Asia were the market's weak links. Caterpillar (CAT) was off $1.47 to $83.14, and IBM (IBM) dropped $1.74 to $189.67. The two combined to subtract about 23 points from the Dow Jones Industrial Average ($INDU), which closed down 36 points to 12,736.

Immediately after the close, the second-quarter earnings season began when aluminum giant Alcoa (AA) said it had earned 6 cents a share after one-time charges, matching analysts' projections. Revenue of $5.97 billion was off 1.6% from a year ago but was better than the Street estimate of $5.81 billion. Shares were up 3 cents to $8.76 in regular trading and were up an additional 2 cents to $8.78 after hours

The Dow was off as many as 86 points before bargain hunting trimmed its losses. The Dow's rebound was mirrored by the Standard & Poor's 500 Index ($INX), which saw an 8-point loss in the morning whittled down to just 2 points to 1,352. The Nasdaq Composite Index ($COMPX), once down as many as 18 points, closed with a 6-point loss to 2,932. The Nasdaq-100 Index ($NDX) was down 2 points to 2,610, although Apple (AAPL), the biggest influence on the index, was up $8.01 to $613.89.

Article continues below.
Like the Dow, the S&P 500 was down for the third straight session. The Nasdaq's decline was its second in a row.

Futures trading suggests a modestly lower open for stocks on Tuesday. Partly, that's due to a Federal Reserve report showing that consumer credit expanded more than expected. A big gain in credit-card debt suggested families a struggling to make ends meet.

Patriot Coal
(PCX) filed for Chapter 11 bankruptcy protection today. The company is the biggest casualty so far of in a major slump for U.S. coal producers. Coal operators have cut tens of millions of tons of production this year. Patriot, which operates in Kentucky and West Virginia, has idled some of its mines, reduced a 2012 forecast for sales of steelmaking coal. It also warned of a potential default by a key customer. Shares fell 77 cents to $1.42.

After the close, Advanced Micro Devices (AMD) shares were off 10% to $5.05 after falling 13 cents to $5.62 in regular trading. The company said second-quarter revenue would be down about 11% from the first quarter due to softer-than-expected sales in China and Europe and a weak consumer-buying environment. AMD had previously forecast second-quarter revenue would increase 3% from the first quarter, plus or minus 3 percentage points.

Alex Gauna of JMP Securities said the weaker-than-expected sales in China reflect better operational performances by rivals Nvidia (NVDA) and Intel (INTC). 

Health-care stocks lead the market
Health care and telecommunications were the strongest sectors of the S&P 500. Health care was boosted by news that Wellpoint (WLP) is buying rival health management company Amerigroup (AGP) for $4.5 billion.

Amerigroup jumped $24.45 to $88.79 after the company and Wellpoint announced their merger. WellPoint shares rose $1.94 to $61.95.

It was the first big health care deal since the Supreme Court's June 28 ruling affirming the constitutionality of the health care reform law.

Meanwhile, health insurer Wellcare Health Plans (WCG) surged $9.73 to $62.56. The Morgan Stanley Healthcare Payor Index ($HMO) climbed 212 to 2,383.

Stocks in the S&P 500 Health Care Sector are up 1.3% overall since the Supreme Court decision. The S&P 500 is up 1.8% over the same period.

Energy prices -- New York close



Mon.

Fri.

Month chg.

YTD chg.
Crude oil (-CL)

$85.99

$84.45

1.21%

-12.99%
(per barrel)











Heating oil (-HO)

$2.7490

$2.7099

1.44%

-5.67%
(per gallon)











Natural gas (-NG)

$2.8830

$2.7760

2.09%

-3.55%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.7594

$2.7160

4.85%

3.84%
(per gallon)











Brent crude 

$100.32

$98.19

2.58%

-6.57%
(per barrel)











Retail gasoline

$3.3820

$3.3810

0.86%

3.24%
(per gallon; AAA)












Crude oil and gold move higher; drought worries push corn, wheat up
Crude oil (-CL) settled up $1.54 to $85.99 a barrel. Brent crude was up $1.65 to $99.84 a barrel. One reason for the gains was a possible oil workers strike in Norway.

The national average retail price of unleaded gasoline was $3.382 a gallon, according to AAA's Daily Fuel Gauge Report, up slightly from Sunday's $3.381 a gallon. It is also up 5.6 cents from what looks like a bottom at $3.326 a gallon, reached on July 2.

Gold (-GC) settled up $10.20 to $1,589.10 an ounce. Silver (-SI) was up 42.4 cents to $27.444 an ounce, and copper (-HG) ended up 2.2 cents to $3.4315 a pound.

Corn
(-ZC) and wheat (-ZW) climbed as worries about the Midwest drought (and drought in Russia) grew. Corn finished up 37 cents, or 5.3%, to $7.30 a bushel and is up 15% this month alone. Wheat was up 2.7% to $8.28. It's up 9.4%, and, yes, the gains for agricultural commodities have raised fears of a new round of food-price inflation.

Interest rates were lower, with the 10-year Treasury yield falling to 1.513% from 1.544% on Friday. The dollar was down slightly against major currencies. The euro (EURUSD) fell to $1.22639, a two-year low, before recovering to $1.23168.

Why are the markets uneasy?
The U.S. stock market has been pressured by worries about Europe and China and signs of a slowing economy in the United States. The Labor Department reported Friday that U.S. payrolls expanded by a seasonally adjusted 80,000 in June, less than the expected 100,000.

Manufacturing growth has been slipping, and retailers reported lackluster sales for June. Estimates for second-quarter profit growth have been shrinking. Europe is one head wind for the United States, and an important one. Ford Motor (F) warned that its European operations would lose money for the second quarter. General Motors (GM) has also seen its U.S. business struggle.

What's not clear is if the softness that's hit the U.S. economy is a momentary pause, or if the problems in Europe, Asia and elsewhere -- not to mention a battle over federal spending and taxation -- are signs that something very serious is going to happen.

One serious bear is Nouriel Roubini, the New York University economist, who believes something like the 2008 crash is coming next year. He sees governments running out of tools to fix their banking crises and economies. And he worries about a possible U.S. attack on Iran in 2013 regardless of who wins this fall's presidential election.

Boeing is selling lots of 737s
Boeing (BA) gained 34 cents to $74.03 and was one of the top five performers among the 30 Dow stocks. The company said it finalized an order to sell 75 Boeing 737 airliners to Air Lease Corp. (AL) valued at $7.2 billion. Air Lease was off 7 cents to $19.15.

Boeing also was set to announce on Thursday an $8.4 billion order for 100 737s, including the new 737 Max version, from United Continental Holdings (UAL), the parent of United Airlines. 

Separately, shares of Visa (V) and MasterCard (MA) were lower after UBS analysts downgraded the payment processors to "sell" from "neutral," citing slower consumer spending in the United States and sluggish global economic growth. Visa shares were down $1.63 to $123.65. MasterCard shares lost $10.36 to $431.27.

Campbell Soup (CPB) shares fell 27 cents to $32.72. The soup-maker said it is buying privately held Bolton Farms, which produces high-end juices and salad dressings.

Short hits from the markets -- New York close



Mon.

Fri.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0700%

0.070%

-12.50%

600.00%
5-year Treasury note 

0.624%

0.640%

-14.40%

-24.82%
10-year Treasury note

1.513%

1.544%

-8.80%

-19.13%
30-year Treasury bond

2.620%

2.664%

-5.18%

-9.31%
Currencies











U.S. Dollar Index

83.351

83.561

1.95%

3.51%
British pound

1.5533

1.5485

-1.09%

-0.03%
(in U.S. $)

 








U.S. $ in pounds

£0.644

£0.646

1.10%

0.03%
Euro in dollars

$1.23

$1.23

-2.40%

-4.92%
(in U.S. $)

 








U.S. $ in euros

€ 0.812

€ 0.815

2.46%

5.17%
U.S. $ in yen 

79.74

79.66

0.00%

3.43%
U.S. $ in Chinese

6.39

6.36

0.36%

1.09%
yuan











Canada dollar

$0.982

$0.980

-0.08%

0.07%
(in U.S. $)

 








U.S. dollar 

$1.019

$1.020

0.08%

-0.07%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,589.10

$1,578.90

-0.94%

1.42%
(per troy ounce)

 








Copper (-HG)

$3.432

$3.410

-1.86%

-0.13%
(per pound)

 








Silver (-SI)

$27.4440

$26.9200

-0.61%

-1.69%
(per troy ounce)

 








Wheat (-ZW)

$8.2825

$8.0625

9.38%

26.89%
(per bushel)

 








Corn (-ZC)

$7.3000

$6.930

15.01%

12.92%
(per bushel)

 








Cotton 

$0.7069

0.7062

-0.90%

-22.89%
(per pound)

 








Coffee

$1.8235

1.7645

6.82%

-20.60%
(per pound)

 








Crude oil (-CL)

$85.99

$84.45

1.21%

-12.99%
(per barrel)










 

218Comments
Jul 9, 2012 1:46PM
avatar
Another Doom and Gloom Day on Wall Street, but guess what, oil is up again, what a surprise. Until Congress addresses excessive oil speculation in futures trading, this economy is not going to rebound. These Greedy People are one of the main reasons why our current economy is in shambles and they are raising prices up once again. Went up 10 cents a gallon in my area over the weekend. The Iran Oil Embargo is nothing more than a tool for them to use to raise prices back up. Speculators do not care how hard they make it for the working and poor people in our country who are scraping to make ends meet as long as they are making their fortunes off oil. Greed is a terrible thing that does not go away.
Jul 9, 2012 3:00PM
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LOL.... The head of SF Fed says we need a another round of Bond buying Stimulus to bring down Unemployment....  LOL 

Want to really bring down unemployment, make a large donation to Romney, and get Obama out of there.  That would cost less than say 4 billion, would work, and would be cheap.   The solution to helping the unemployment rate is to FIRE Obama and as many Donkeys as possible.

QE III is not needed.  We should not reinforce failed policies with more of the same.  It is time to fire the Fed along with "57 States"...   No QE III, no stimulus, NO new taxes, and SLASH Spending 1 Trillion NOW....  That is what is needed to get America back on the right track.
Jul 9, 2012 1:47PM
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getting ready for the old pump an dump again?  get us to buy then you all move in an sell??????  how come we are attached to the apron strings of EUROPE we fought to end this , now they are in charge of our future again???????? WHY? 

  Price of oil went up last week according to the news because of labor problems in Norway , why ????

Same old story EUROPE AN GREED !!!!! CHANGE THE CHANEL give us the TRUTH !! Some where some one has to know it , but do not want us to find out  the why an where fore?? 

Jul 9, 2012 4:26PM
avatar
And the fact that you guys are arguing over this stupid territory nonsense is exactly what I am talking about.  With all the stupid BS arguing in politics, and all the ridiculous amounts of energy you people waste on non issues, you are doing exactly what they want you to do.  Not focusing on the real issues, and not forcing them to do what they need to do.  When you finally stop believing that either the Republicans or the Democrats hold all the answers to a better future, you will have finally opened your eyes.  They are both right, and both wrong, and neither has your best interests at heart.  If you never wake up, things will never get better for the common man.  If you keep up this stupid game, our country will continue to decay and rot from within, and the rich will get richer, and the powerful will own you more than ever.  Wake up.  Please.
Jul 9, 2012 1:52PM
avatar
The government is clearly in favor of manipulating the price of gasoline, to keep it higher than it should be.  Is that what you want?  Do you ever wonder why you vote for Republicans and Democrats?  Every time you vote for them, you vote for the rich and powerful's best interests.  Are you rich and powerful?????
Jul 9, 2012 4:01PM
avatar
I know that Wall Street and the Crude Oil Speculators think we are stupid, maybe we are! Crude Oil prices are rising on the chance that there will be a work stoppage in Norway? What a load of cr*p. The poor little guy was starting to enjoy a tiny break from being raped by the speculators, so you had to raise prices. Watch the big boom in auto sales dry up, watch the RV makers dry up and the poor man can"t find a job because he can't afford to get there. Wall Street makes me sick. they should have let the economy fail 4 years ago instead of bailing you out. I am so angry I could spit. Neither Presidential candidate cares about the average american worker, certainly not Romney. Sorry for rambling on but I am truley disgusted with the whole system.
Jul 9, 2012 3:25PM
avatar
Obuma is dumber than a box of hammers.
Jul 9, 2012 3:21PM
avatar
Re-Tog, could you dumb it down for the democrats here...3rd grade is way too tough for them....  Just look at "57 States"...  
Jul 9, 2012 4:59PM
avatar
5pmFriday...

The real problem is SPENDING.  How do we get Obama to ELIMINATE 1.2 trillion in SPENDING NOW?   

He proposed 600 Billion in new spending, a 4.4 billion budget, which received ZERO votes in congress... it lost 424 to ZERO.   Clearly he is clueless.  Obama raised spending 800 Billion a year, without his Stimulus.   We need to get rid of all of Obama's additional "Investment" (The democrats word for special interest payback spending).  Then we need to slash Defense spending 200-250 billion.  Then we need to cut the other 200-150 billion.  Then if we raise taxes to pay off the debt in 32 years (16 trillion / 32 years = 500 Billion/yr) we only need to raise the average family of 4's taxes 6500/year.

This of course assumes ZERO interest, and NO NEW SPENDING for 32 years!

When do you want to start?  Maybe now you see the magnitude of the hole Obama spent us into?
Jul 9, 2012 4:03PM
avatar
More like "Stocks drop on Obama worries". Wonder what that clown is going to do next. Best to vote him out in November....
Jul 9, 2012 4:41PM
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>>>AND YOUR SOLUTION IS ??????<<<
 
His point is clear.  Stop the snarky commentary and let discuss real issues.  The Parties have us right where they want us... divided.  and while we're bickering amongst ourselves, there's a huge sucking noise of money going into Swiss and Bermuda bank accounts.
 
Like I said, There were 10 cookies on the plate.  the CEO took 9 of them and then told the Republican than the Democrat wants to steal his cookie.  The Parties have you fighting over the scraps.
Jul 9, 2012 3:28PM
avatar
trickle down only works for the ones at the top. pyramid type of workings!!!!!!  never trickles enough to help any one but already haves !!!!!!!  by the time it comes down where it could help anyone they throw another tax on what ever is available , an we never see any thing except another bill to pay.
Jul 9, 2012 4:10PM
avatar

CR_ROC wrote: PS Everyone is really getting tired of the "57 States" crap.  You know, I know, it has been explained one thousand times that he was referring to the 50 States and our Territories.  So please, just drop it.

 

What, and miss the opportunity to revile the the president? Do you think we should give him a free pass on not having the common sense to PROOFREAD the speeches his writers pen for him? He couldn't explain the gaffe at the time and "you, me and everyone" had to wait for his advisors to explain it. Jeez, what a killjoy you are! 

Jul 9, 2012 6:10PM
avatar
So now i see NORWAY is the cause for oil to go up a little... Really?? NORWAY???
Jul 9, 2012 4:42PM
avatar
I have to laugh....  Odumba says we should not fight to repeal Obummercare...  when after 10+ years he  is still wanting to repeal W's tax cuts.  He just doesn't get it, his class warfare ideas do not work...

The people paying 42% of all taxes (The 1%ers) are not under taxed, the 48% of people that pay ZERO income taxes need to stop being the LEECHES they are and start paying their way.

We spend 3.8 Trillion and have 308 million people, that means each person in the USA must pay 12,337 in taxes every year (There fair and EQUAL share).  So a family of 4 owes 49,350 in taxes.  Otherwise they are LEECHING off someone else.   It really is that simple.  The 1% are over taxed, and the 48% well, they pay nothing now, so they certainly NEED to start pulling their weight.   Of course the people voting for a living, instead of working for a living see this as their right.  As Marx would say those according to their ability, those according to their want...

Fire as many democrats as possible this November.  Enough of the LEECH class...
Jul 9, 2012 3:40PM
avatar
POLITICS THE STORY OF THE RICH AN INFAMOUS .OR how we steal legaly, an make laws to protect our selves, with out the public being able to vote !!!!!!!!!!!
Jul 9, 2012 2:27PM
avatar

V_L wrote: We need to go back to pre-Tax Reform Act increments for earnings and restore Glass Steagall.

 

You got this part right!! Separate Banking from "Investment Houses". Do not allow banking entities to be affiliated IN ANY WAY with Wall Street Shoot- from- the- hip- with- other- peoples- money crowd. 

Jul 9, 2012 3:22PM
avatar
Re Tog

You calling someone too juvenile is the most ridiculous and hypocritical thing I have heard in weeks.  You are quite frequently the definition of juvenile.  Or should I go back through all your posts and find some nice examples to post for everyone?  Idiot.
Jul 9, 2012 2:33PM
avatar
P.S. It just changed to "Earnings worries drop stocks"?!!!!!???!!! It was EU few minutes ago. Make up your mine Wall Greed
 
American businesses *gasp* do a lot of business in Europe.  Apple, IBM, Cat, Intel, Ford, GM, Alcoa, FreeportMcMoRan, Boeing...these business all depend, to different extents, on business in Europe.  Ford, for example, derives 30% of its revenues from sales in Europe.  The Eurozone is the world's largest economic entity by GDP and its recession has ripple effects across the global econmy.  They're China's largest trading partner.
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