Dow off 97 as European fears hit stocks again

The blue chips rebound from an early 184-point tumble but still fall for a 6th straight day. European turmoil buffets world markets. Gold falls under $1,600; oil briefly drops under $96. Cisco Systems shares slump after hours; News Corp. gains.

By Charley Blaine May 9, 2012 1:22PM
Charley BlaineUpdated: 7:19 p.m. ET
 
Stocks finished lower today because of worries about economic and political conditions in Greece and Spain. But steep losses in the morning were trimmed substantially by the close.

The Dow Jones industrials ($INDU) were down as many as 184 points by 10:25 a.m. ET, but the loss was cut by about half at the close. Still, this was the sixth loss in a row for the blue-chip index, its longest losing streak since July and August 2011. And the major averages worked their way back just about to flat on the day by 2 p.m. ET, but fell back by the close.

The news from Greece was chaotic. The nation is still struggling to form a government after Sunday's elections. And there was talk the European Union might delay a payment to Greece under the terms of its February bailout plan. Markets turned on what was termed "signs" the payment will go through. In addition, worries built about the stresses facing Spain's banking system. Spain's benchmark IBIS Index ($EP:IB) fell to its lowest level since October 2003.

After hours, shares of Dow component Cisco Systems (CSCO) slumped on lower-than-expected guidance even as quarterly results beat Street estimates. Shares of media giant News Corp. (NWSA) were up nearly 3% in part because of strong results. Plus, News Corp. expanded the company's share repurchase program.  

The Dow closed down 97 points to 12,835. The Standard & Poor's 500 Index ($INX) dropped 9 points to 1,355, and the Nasdaq Composite Index ($COMPX) was down 12 points to 2,935.

Article continues below.
The Nasdaq-100 Index ($NDX), dominated by Apple (AAPL), was off 9 points to 2,621. Apple was up $1 to $569.18, which boosted the Nasdaq-100 by about 2 points. The index was held down by weakness in Teva Pharmaceutical (TEVA), Oracle (ORCL) and Intel (INTC). And only 31 stocks in the index were higher.

There was disappointment with Macy's (M) guidance, which knocked the stock down $1.46 to $38.05. That's a big improvement, however. The stock had fallen to as low $37.02.

Futures trading suggests the major indexes will open lower on Thursday. Nordstrom (JWN) reports quarterly results after the close. The government will report on initial jobless claims. Britain, Italy and France report on industrial production. The Bank of England will announce whether it is changing interest rates.

Cisco's guidance hurts
Cisco Systems earned 48 cents a share after one-time charges and gains, up from 42 cents a year ago and a penny higher than the Street estimate.

Revenue was $11.6 billion, up 7% from a year ago and ahead of the Street estimate of $11.6 billion. CEO John Chambers said spending from governments globally was flat and likely will stay that way. Business spending was fairly strong.

But shares fell more than 8% to $17.16 from a regular close of $18.78 after the company guided lower for fiscal-fourth-quarter revenue. The decline will weigh on Thursday's market because Cisco is an important member of the S&P 500 and the Nasdaq-100 as well as the Dow.

The company forecast a 2% to 5% increase in revenue for the quarter. That would put the high side of the range at $11.75 billion. Analysts were looking for $12 billion. Earnings will come in a 44 cents to 46 cents, below the Street consensus of 49 cents.

Cisco reported 5% order growth in the Americas and 7% in Japan and Asia. But there was little order growth from Europe and India. And orders from big companies dropped in the quarter, and it’s taking longer to sign large deals with corporate customers, CEO John Chambers said on the company's conference call.

News Corp.'s earnings gain
News Corp. shares jumped 52 cents to $19.90 after hours from a regular close of $19.38. The company said it had earned 38 cents a share in the fiscal third quarter, up from 24 cents a share a year ago and ahead of the Street estimate of 31 cents. Revenue rose 2% to $8.4 billion.

The gains were boosted by the company's cable and film businesses. But the company disclosed that it took a charge of $63 million related "to the costs of the ongoing investigations initiated upon the closure of The News of the World." That's the Sunday tabloid newspaper at the center of the ongoing British probe of company employees hacking into cellphones of celebrities and others.

The statement did not mention that, because of the phone-hacking scandal and the accusations the company had stonewalled the investigation, a majority of a British parliamentary committee declared News Corp. CEO Rupert Murdoch unfit to run a major international company.

Technology and utilities lead the market
 Only two of the 10 sectors of the S&P 500 were higher: technology and utilities. Industrial and financial stocks were the weakest sectors. Financial sagged because of the worries about exposure the largest banks may face to Europe. JPMorgan Chase (JPM) fell 74 cents to $40.64. Bank of America (BAC) dropped 6 cents to $7.73. Citigroup (C) was off 87 cents to $30.45. Wells Fargo (WFC) moved down 52 cents to $32.63.

Gold shares were generally higher.

Lastly, only six Dow stocks are higher, led by Walt Disney (DIS). The laggards are United Technologies (UTX), JPMorgan Chase and General Electric (GE). All generate significant revenue from Europe.

About 140 S&P 500 stocks are higher, led by MetroPCS Communications (PCS), up 94 cents to $7.50, and Dean Foods (DF), up $1.43 to $14.15. The laggards were Pitney Bowes (PBI) and CF Industries (CF).

The slump is real
The market has hit a pronounced downdraft.

In addition to the Dow's sixth loss in a row, the S&P 500 is off for the fifth day in the last six. The Nasdaq is off for the fourth time in five sessions.

The Dow is off 444 points, or 3.4%, since peaking at a four-year high on May 1. The S&P 500 and Nasdaq are down 3.8% and 5.9%, respectively, since hitting a 2012 high on April 2.

One can never predict when a slump will end. But there is a major support level for the S&P 500 -- a level that seems to generate buying -- at 1,340. The index bottomed today at 1,343. However, the index chart is now showing a head-and-shoulder pattern that is a signal for further stress ahead. Check the chart here.

Energy prices -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Crude oil (-CL)

$96.81

$97.01

-7.69%

-2.04%
(per barrel)











Heating oil (-HO)

$2.9991

$2.9901

-5.81%

2.91%
(per gallon)











Natural gas (-NG)

$2.4650

$2.3930

7.88%

-17.53%
(per mil. BTU)











Unleaded gasoline (-RB)

$3.0241

$2.9944

-3.22%

13.80%
(per gallon)











Brent crude 

$113.20

$112.73

-5.30%

5.42%
(per barrel)











Retail gasoline

$3.7500

$3.7630

-1.73%

14.47%
(per gallon; AAA)












Oil briefly falls below $96; gold drops under $1,600
Commodity prices were lower again as the dollar rose against the euro. The euro was trading at $1.297. It had fallen to $1.29182, the lowest level against the dollar since January.

Light sweet crude oil (-CL) in New York settled down 22 cents to $96.79 a barre. Crude had traded below $96 for much of the day, falling to as low as $95.17. Brent crude was off 19 cents to $112.92 a barrel after falling to as low as $111.31.

Pressuring oil has been an Energy Department report that domestic stockpiles had grown by 3.65 million to 379.5 million barrels, the most since August 1990. The price rebounded because of higher prices for wholesale gasoline and other fuels.

The retail price of unleaded gasoline averaged $3.75 a gallon today, according to AAA's Daily Fuel Gauge Report, down from Tuesday's $3.763. The price is off 18.6 cents, or 4.7%, since peaking at $3.936 on April 6. If you pumped 10 gallons at $4 a gallon a month or so ago and can get it for $3.75, you've saved $2.50.

Gold (-GC), meanwhile, settled down $10.30 to $1,594.20 an ounce, its lowest close since Dec. 30. Silver (-SI) settled down 21,8 cents to $29.24. Copper (-HG) fell 1.8 cents to $3.6595 a pound.

Gold is off 4.2% in May. On Feb. 28, gold had been up 14.1% for the year; the gain is now 1.7%.

Silver is down 3% this month and 10% for the year. Copper, watched closely as an economic barometer, is off 4.4% for May and 4.3% for 2012. The 10-year Treasury yield was at 1.826%, down from Tuesday's 1.837%.

Disney's decent quarter; Glaxo starts a hostile takeover fight
Disney shares were up 72 cents to $45.02 after fiscal-second-quarter earnings beat estimates. The stock had hit an all-time intraday high of $45.80, one of 26 stocks hitting all-time highs today.

The company earned 58 cents a share in earnings after one-time charges, 3 cents better than expected. Revenue of $9.63 billion was up 6% from a year ago and ahead of Wall Street's forecast of $9.56 billion.
 
GlaxoSmithKline's (GSK) American depositary units were off 52 cents to $45.50. The pharmaceutical maker is launching a hostile bid for the biopharmaceutical company Human Genome Sciences (HGSI) for $2.6 billion, or $13 a share. Human Genome was off 3 cents to $14.59.
 
Green Mountain Coffee Roasters (GMCR) shares were down 11 cents to $26.27 after falling to as low as $25.26. Late Tuesday, the company announced the replacement of its chairman, Robert Stiller, and lead director, William Davis, after the executives were forced to sell roughly 5.5 million Green Mountain shares because of margin calls. The company called the sales "inconsistent" with its internal trading policies.

The contagion worry in Europe
The market struggled as political turmoil in Greece renewed concerns about the country's ability to meet the terms of its bailout and remain a member of the eurozone. Most analysts now believe that Greece will exit the eurozone.

If investors have to take big write-downs on Greek debt holdings, they may sell Spanish and Italian bonds, forcing those countries to seek bailouts as well. The eurozone’s 500 billion-euro ($650 billion) bailout fund might be able to handle a rescue of Spain, but it would probably be stretched too thin with additional countries -- especially Italy, which has a debt burden of 1.9 trillion euros.

Spain's 10-year bond yield jumped to 6.078% today, its highest level since November, with its banks facing the mounting pain of bad real-estate assets.

The Spanish government was expected to rescue Bankia, the country's third-largest banking company by assets, by taking a large stake in the troubled lender.

The Bankia cleanup has long been seen as an acid test of Spain's resolve to put its financial house in order. Bankia has the industry's largest exposure to Spanish real-estate developers, with 37.52 billion euros ($48.7 billion) in loans to the sector. Nearly 18 billion euros of those loans are considered problematic.

Short hits from the markets -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0900%  0.090%

0.00%  800.00%
5-year Treasury note 

0.760%  0.763%

-6.29%  -8.43%
10-year Treasury note

1.835%  1.837%

-4.18%  -1.92%
30-year Treasury bond

3.039%  3.023%

-2.25%  5.19%
Currencies











U.S. Dollar Index

80.232  79.849  1.76%  -0.36%
British pound

1.6093  1.6160  -0.92%  3.57%
(in U.S. $)

          
U.S. $ in pounds

£0.621  £0.619  0.93%  -3.45%
Euro in dollars

$1.29  $1.30  -2.40%  -0.22%
(in U.S. $)

          
U.S. $ in euros

€ 0.773  € 0.769  2.46%  0.22%
U.S. $ in yen 

79.74  79.89  -0.32%   3.43%
U.S. $ in Chinese

6.32  6.30  0.28%  -0.11%
yuan

            
Canada dollar

$0.996  $1.002  -1.76%  1.47%
(in U.S. $)

          
U.S. dollar 

$1.005  $0.998  1.79%  -1.46%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,594.20

$1,604.50

-4.21%

1.75%
(per troy ounce)











Copper (-HG)

$3.660

$3.678

-4.44%

6.50%
(per pound)











Silver (-SI)

$29.2410

$29.4590

-5.72%

4.75%
(per troy ounce)











Wheat (-ZW)

$6.0000

$6.1500

-8.33%

-8.08%
(per bushel)











Corn (-ZC)

$6.0725

$6.230

-4.26%

-6.07%
(per bushel)











Cotton 

$0.8582

0.8618

-4.00%

-6.39%
(per pound)











Coffee

$1.7505

1.7495

-2.51%

-23.78%
(per pound)











Crude oil (-CL)

$96.81

$97.01

-7.69%

-2.04%
(per barrel)










 

109Comments
May 9, 2012 3:23PM
avatar
O h my president Obama, same sex marriage approval to get re-elected!!! You are really desparate!!! No Obama in 2012!!
May 9, 2012 4:31PM
avatar
You must mean Obama. First he was for gay marriage, then he was against it and now he is evolving, so it appears he is for it again. He is a Flip Flopping Fraud

Constitutional bans on same sex marriage, law makers for it, law makers against it... you'd think they'd have more pressing issues to take of, rather wasting time on trivial things like this. 

 

May 9, 2012 1:49PM
avatar
The only thing keeping this market up is the Federal Reserve and printed money.
May 9, 2012 3:57PM
avatar

Direct quote from MSN below.

 

   The retail price of unleaded gasoline averaged $3.75 a gallon today, according to AAA down from Tuesday's $3.763. The price is down 18.6 cents, or 4.7%, since peaking at $3.936 on April 6. If you pumped 10 gallons at $4 a gallon a month or so ago and can get it for $3.75, you've saved $2.50 a gallon.

Save $2.50/Gallon? What kind of math are they using here? Does anyone proof read this garbage?

May 9, 2012 3:07PM
avatar
The Dow falls 184 points, but investor buying trims the loss. What they fail to mention is the investors are companies buying their own stock to keep the share price high. 
May 9, 2012 2:56PM
avatar
The only thing keeping this market up is the Federal Reserve and printed money.

you forgot to mention the LACK of prosecutions from AG as the story goes these past few day's; he doesn't want to step on any toes as he'll be lookin for a new job come jan 2013 it should be sooner IMO!

May 9, 2012 3:53PM
avatar

Some interesting posts related to the price of oilEye-rolling Had to laugh at the post believing it only takes $2 a barrel to extract oil on land. I've noticed no one complaining about the price per gallon of Diesel. Big profit there for Oil refineries compared to refining and selling gasoline. Big reason food and many other products are costing the consumer more. Lots of diesel demand overseas and in the US is driving the price. Since many overseas countries don't have the refining capacities we have, a lot of our refined Diesel is also sold overseas at high prices that effect our domestic diesel prices.

Now something else to consider. We could, perhaps, produce all of the oil we desire in a few years to serve our demand for refined oil products (excluding the demands of other countries). However, If you can't refine the oil that's been extracted, it's basically useless. Today, many of our older US refineries are up for sale with no one wanting to buy them. Therefore, they shut them down if they can't find buyers. The reason is the cost of upgrading them to meet EPA standards. We're not building new refineries for the same reason, which means our capacity to supply gasoline to our US markets, is diminishing yearly; which then raises the prices of refined products, even if price speculation was removed as a cause for price fluctuations.  Many overseas Countries are going to solve their refining problems and I believe most of you would agree; their not going to worry about the environment. I don't pretend to know the answer, but I do believe the US needs to take a hard look at the present EPA regulations and determine if revisions are needed. Further, as many have posted, we also need to take a look at the Commodities regulations.

May 9, 2012 2:55PM
avatar

relayman,

 

The knee jerk default position for europeans is to go more socialist and not less so. They're like drowning men that gasp anchors rather than life vests.

May 9, 2012 3:22PM
avatar

Forget the stock market, watch the Government Bond sales to float this Disney Land economy! The Fed has stopped the Quanitive Easing "Bond Buy Up" when the Chinese pulled out of our bond market. When we get to where we can't sell the bonds to float this wet dream government fairy tale of an economy then it is over. Who is going to pay for this mess, not to mention how do we service the interest on the debt.

 

If this is the way to run a free market economy I would hate to see a planned one!

May 9, 2012 4:28PM
avatar

The Federal Reserve has for the first time given approval for a large Chinese bank to purchase a U.S. bank

 

Looks like its going to be US bank to start with.  Then others to follow.  Press1 for english press 2 for spanish press 3 for chinese.

May 9, 2012 4:09PM
avatar

The Federal Reserve has for the first time given approval for a large Chinese bank to purchase a U.S. bank

 

I have to ask myself who is the Fed that has the power to approve such a thing?

 

Something smells mighty fishy to me.

May 9, 2012 3:58PM
avatar

"O h my president Obama, same sex marriage approval to get re-elected!!! "

 

Anybody who votes for a candidate purely based on social issues is an idiot. I don't expect anyone in office to tell me how to live my life according to their version of morality. I never get the chance to vote for a candidate who is against the death penalty, but that doesn' t stop me from voting.

 

If you don't believe in gay marriage, don't marry a gay person!

If you don't believe in abortion, don't have an abortion!

 

Be the change you want to see...

May 9, 2012 11:10PM
avatar
I think we should push for term limits on congresspeople, just like the presidency, 2 term limit. Then they can go back to real life and earn their living under the policies they enacted, i.e. no more full pay retirements. This way every 8 to 10 years we get a whole new congress, with new ideas. Sooner or later we will get some people in there that will do the right thing.
May 9, 2012 2:50PM
avatar
It wouldn't be so bad if the fed was using its own money to fund the plunge protection team, but they're using ours.
May 9, 2012 4:47PM
avatar
The Federal Reserve has for the first time given approval for a large Chinese bank to purchase a U.S. bank 
Permission???? China so controls our economy right now...all they have to do is flood the markets with American debt notes to make the dollar worthless.... remember, a weak system collapses of its' own weight.......
May 9, 2012 4:19PM
avatar

The Soviet Union, Saudi Arabia, and the Untied States are the big 3 producers of oil. So why aren't we building more refineries in this country? And why are we NOT drilling for more oil domestically??

 

The people of this country are the best, but our government needs to get off there lazy, privileged  rear-ends and fix "stupid."

 

Real change a coming...in 2012

 

 



 

May 9, 2012 4:26PM
avatar
All I can say is, let China pay through the nose for the bank, and pull your money out of it as fast as you can. Leave them holding the bag!
May 9, 2012 4:22PM
avatar
The Federal Reserve has for the first time given approval for a large Chinese bank to purchase a U.S. bank 


I have, for the first time, given THE FED permission to KISS MY AZZ!!!!!!!!!!!
May 9, 2012 4:17PM
avatar
Another day of pathtic gyrated manipulation ..sickening what helicopter Ben is allowed to do...he should be in prison.
May 9, 2012 6:34PM
avatar

Obama will do and say anything to get re-elected. All his promises from his last run have not come true and never will.

 

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