Dow off 65 as Fed signals no need for more stimulus

Stocks crawl back from sharp declines after the central bank signals it needs a faltering economy to expand its stimulus efforts. Apple hits a new high on talk of a $1-trilliion market cap. Auto sales don't impress. Oil prices fall.

By Charley Blaine Apr 3, 2012 1:08PM
Charley BlaineUpdated: 7:21 p.m. ET

Stocks slumped this afternoon after minutes from the Federal Reserve's March meeting showed the central bank did not appear ready to expand its efforts to stimulate economic growth. Instead, the central bank wants to wait to see if the economic recovery can continue on its own.

The Fed's reluctance surprised Wall Street, which was assuming more stimulus efforts were ahead. The Dow Jones industrials ($INDU) saw a modest decline turn into a loss of more than 130 points before bargain hunters cut the decline in half. The dollar rose as interest rates moved higher. Energy, financial and materials stocks were the day's losers.

The slump came along as March auto sales growth, while strong, was not quite as robust as expected. General Motors (GM) shares were lower after reporting an 11.8% sales gain. Wall Street was looking for a 20% gain.

Apple (AAPL) surged to a new intraday high of $632.21 before falling back to $629.32, up $10.69. The gains were prompted by analysts' continuing to push price targets higher. Piper Jaffray's Gene Munster said on CNBC that Apple's market capitalization would reach $1 trillion by 2014. He also flatly predicted Research In Motion (RIMM) would not survive Apple's competitive pressure. RIM shares were off $1.36 to $13.01.

The Dow finished down 65 points to 13,200. The Standard & Poor's 500 Index ($INX) was off 6 points to 1,413, and the Nasdaq Composite Index ($COMPX) was off 6 points to 3,114.

Article continues below.
The Nasdaq-100 Index ($NDX) closed down 2 points to 2,783. The loss would have been larger were it not for Apple, which represents more than 12% of the market capitalization. Apple contributed 9 points to the index.

Energy was the weakest market sector, followed by financials and materials, as lower oil prices and concern over Europe were issues for many traders. Exxon Mobil (XOM) was down $1.24 to $85.83. JPMorgan Chase (JPM) was down 41 cents to $45.42.

In addition to the Fed minutes, investors had been disappointed by a government report showing factory orders missed estimates slightly. Also helping the dollar move higher were concerns that the European debt crisis might erupt with pronounced weakening of Spain's economy.

Spain's public debt will rise to a record this year as it sells almost 37 billion euros ($49 billion) of bonds to finance a budget deficit that was nearly three times the euro-area limit last year. At the same time, unemployment is expected to rise to 24.7% from 23.6% now.

A lower open on Wednesday?
Futures trading suggests the U.S. market will open slightly lower on Wednesday. The government will release its weekly report on oil inventories.

Apple will be in focus in part because flash-memory maker SanDisk (SNDK) warned late today that fiscal-first-quarter revenue and earnings will be lower than expected. The company, whose chips are used in smart phones and in other applications, expects to report $1.2 billion
in revenue for the quarter, down from prior guidance of $1.3 billion to $1.35 billion. Its gross margin, a key profitability measure, will be below 39%. It had projected 39%-to-42%.

Apple is a customer.

SanDisk shares were down 6.6% to $46.75 after hours; they'd risen 45 cents to $50.05 in regular trading.

In addition, the ADP National Employment Index, a measure of changes in private-sector employment, will come out. Nomura Securities sees the report showing 235,000 private-sector jobs created in March. ADP estimated 216,000 in February.

Lastly, the Institute for Supply Management's Non-Manufacturing Index for March will come out. Nomura sees this rising to 57.7 from 57.3 in February. A reading above 50 means the sector is expanding.

Earnings are due from Bed Bath & Beyond (BBBY) and Monsanto (MON).

Energy prices -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Crude oil (-CL)

$104.01

$105.23

0.96%

5.24%
(per barrel)











Heating oil (-HO)

$3.2275

$3.2496

1.81%

10.75%
(per gallon)











Natural gas (-NG)

$2.1870

$2.1520

2.87%

-26.83%
(per mil. BTU)











Unleaded gasoline (-RB)

$3.3954

$3.3822

2.64%

27.77%
(per gallon)











Brent crude 

$124.86

$125.43

1.61%

16.28%
(per barrel)











Retail gasoline

$3.9230

$3.9250

-0.05%

19.75%
(per gallon; AAA)












Is the Fed pulling back?
Members of the Federal Open Market Committee, the Fed's rate-making body, did not appear ready to continue, much less extend, its efforts to stimulate the economy through so-called quantitative easing -- the purchases of Treasury and related securities to inject more money into the banking system.

The FOMC will continue to buy in bonds until June, the minutes suggest. But that may end the Fed's efforts unless the economy starts to contract.

Interest rates promptly moved higher because the Fed has been the largest buyer of Treasury securities in the last few years. The 10-year Treasury yield jumped to 2.284% from Monday's 2.193%. The yield had been down as much as 2.152% in the morning.

Against that theme was the clear signal from the minutes that the Fed is not likely to raise interest rates any time soon. Most FOMC members "did not interpret the recent economic and financial information as pointing to a material revision to the outlook for 2013 and 2014."

What looks like policies working against each other took some of the edge off the market's decline.

U.S. pump prices fall -- barely
The retail price of gasoline actually fell  today for first time in 25 days, according to AAA's Daily Fuel Gauge Report. The report showed the national average retail price of unleaded gas was $3.923 a gallon, down from $3.925 on Monday.

Crude oil (-CL) settled down $1.22 to $104.01 a barrel. Brent crude was down 38 cents to $125.05 a barrel.

Gold (-GC) was off $7.70 to $1,677 an ounce. Silver (-SI) was off 16.7 cents to $33.27 an ounce. Copper (-HG) fell very slightly to $3.919 a pound.

Auto sales are strong -- just not strong enough

Autodata, a market research firm that tracks auto sales, estimated the seasonally adjusted annual sales rate for March at 14.4 million units, up from a 13.1-million rate in March 2011 and a 15.1-million unit rate in February.

Reuters had forecast a sales rate of 14.75 million units. But the odds seem to favor a rate of 14.5 million units or lower.

Ford Motor (F) added 2 cents to $12.64 as the sales rose 5.1% last month, its strongest March sales in five years. Chrysler Group, majority owned by Fiat (FIATY), reported its best quarter in four years. U.S. vehicle sales rose 34% in March from a year earlier.

While GM's sales gain was a disappointment, the company did sell more than 100,000 vehicles, led by small and compact cars.

Toyota (TM) sales were up 15.4% with sales topping 200,000 units for the first time since 2008. Still, analysts had expected a 22.1% gain.

Nissan (NSANY) sales were up 12.5% from a year ago. Volkswagen (VLKAY) sales were up 34% from a year ago.

Separately, the Commerce Department said factory orders rose 1.3% in February, less than the 1.5% economists had predicted. In January, factory orders decreased by 1%.

There was rising demand for machinery, computers and aircraft, Dow Jones Newswires reported. January orders were revised to a 1.1% loss, from a previously reported 1.0% fall, the Commerce Department said Tuesday.

Winners are in short supply
McDonald's (MCD) and American Express (AXP)  were the top performers among the 30 Dow stocks, up $1.04 to $99.40 and 58 cents to $58.39, respectively. Only four Dow stocks were higher.

Bank of America (BAC) and Hewlett-Packard (HPQ) were the laggards, down 19 cents to $9.49 and 43 cents to $23.45, respectively.

Meanwhile, 148 S&P 500 stocks were higher, led by Express Scripts (ESRX), up $1.34 to $57.67, and Priceline.com (PCLN), up $23.65 to $743.62.

The laggards were First Solar (FSLR), down $1.93 to $22.60, and supermarket operator Supervalu (SVU), down 36 cents to $5.30.

Lastly, only 36 Nasdaq-100 stocks showed gains, led by Express Scripts and Priceline.com. Apple was the sixth-best performer.

Research In Motion was the Nasdaq-100 laggard, followed by First Solar.

Short hits from the markets -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0700%  0.060%

0.00%  600.00%
5-year Treasury note 

1.105%  1.021%

5.94%  33.13%
10-year Treasury note

2.284%  2.193%

3.07%  22.07%
30-year Treasury bond

3.410%  3.338%

1.94%  18.03%
Currencies











U.S. Dollar Index

79.641  78.963  0.64%  -1.09%
British pound

1.5918  1.6028  -0.57%  2.45%
(in U.S. $)

          
U.S. $ in pounds

£0.628  £0.624  0.57%  -2.39%
Euro in dollars

$1.32  $1.33  -0.79%  2.17%
(in U.S. $)

          
U.S. $ in euros

€ 0.755  € 0.751  0.80%  -2.12%
U.S. $ in yen 

83.06  82.10  0.08%   7.72%
U.S. $ in Chinese

6.32  6.29  -0.01%  -0.09%
yuan

            
Canada dollar

$1.010  $1.010  0.75%  2.93%
(in U.S. $)

          
U.S. dollar 

$0.991  $0.990  -0.74%  -2.85%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,672.00

$1,679.70

0.01%

6.71%
(per troy ounce)











Copper (-HG)

$3.919

$3.921

2.46%

14.06%
(per pound)











Silver (-SI)

$33.2650

$33.0980

2.40%

19.17%
(per troy ounce)











Wheat (-ZW)

$6.5800

$6.5700

-0.42%

0.80%
(per bushel)











Corn (-ZC)

$6.5825

$6.550

2.21%

1.82%
(per bushel)











Cotton 

$0.9270

0.9357

-1.30%

1.11%
(per pound)











Coffee

$1.8805

1.8885

1.65%

-18.11%
(per pound)











Crude oil (-CL)

$104.01

$105.23

0.96%

5.24%
(per barrel)










 

73Comments
Apr 3, 2012 2:02PM
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Instead of cutting off my finger I would rather cut off Obama's worldwide credit card.
Apr 3, 2012 2:05PM
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One promise that Obama has actually fulfilled is his wish to get oil prices up to "European levels". You know, because we should more like Europe.
Apr 3, 2012 1:56PM
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Wow ..... gasoline dropped 2/1000 of a cent!  Line-up everyone for the savings!
Apr 3, 2012 2:50PM
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obama said that squeezing iran doesn't have an effect on our oil prices,  so i guess he never told the speculaors this while their killing everyone but the government people and wall street, let it ride obama. idiot in a suit.
Apr 3, 2012 3:11PM
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Earlier in the news today Obama said Israel was the reason for the higher oil prices, the day before Obama said that Iran wouldn't effect oil prices and in 2009 Obama said that gasoline may necessarily have to go to $5.00 a gallon to get us off foreign oil.

 

What we have here folks is an immature sociopath who cannot accept responsibility for his actions or lack of actions.  If it wasn't for george Soros pulling the strings Obama would still be an obscure community organizer and a gold key member of the Chicago Bathhouses with his buddy Rahm Emmanuel.

Apr 3, 2012 5:21PM
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Lets understand this...

 

"Stimulus" as supplied by the Fed, is nothing more than Dollar Debasement.  We should be happy that the FED is not going to create any more dollars out of thin air.  They have already created 37% more dollars since Obama has been President.   That is not Mr. Obama's fault, but you can see the inflation everywhere.

 

We should stop rewarding BORROWERS and start rewarding Saver and capital formation.

 

Ben Bernache should be fired, for crimes against the dollar.

Apr 3, 2012 5:38PM
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There are now 5.5 million less people working today than there were 4 years ago -- this in spite of the fact that we now have 7 million more people living in the US.

 

WHAT RECOVERY?????

Apr 3, 2012 2:36PM
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The Market is having withdrawal symptoms right now without Helicopter  Bendovers stimulus money.  Just a hint of Fed actions sends the markets up on a "dime bag" high, its time to force the bank and Wall street money addicts into recovery so this country can start to recover.  If we hadn't had $17 Trillion in stimulus dumped into the Banks and Wall Streets handsover the past few years the natural economic cycle would have already begun the healing process.  All it did was dilute the dollar forcing commodity prices to go up and make a bunch of Wall Street traders and Banks richer while killing spending from the middle class that make up the bulk of GDP.

 

Look at the real numbers, the 3% GDP growth forecast for 2011 ended up being only .79%.  Go into the DOL stats and look at actual job growth, loss and work to population and you will see we lost 1.7 million jobs since February and the 225,000 jobs created in March consisted of over 160,000 low paying temp or part time work.

 

The best thing Bernanke could do now would be to raise the interest rate and not throw more  baskets of stimulus into the system.  If the Fed really feels a need to boost the system give every tax paying household $100,000 each.  The money would flow back into the system faster, give the middle class needed relief and cost a lot less than the Trillions the Fed will dole out again that only benefit 20% of the population.

 

Will that scenario ever happen?  Not a chance as long as our government, the Banks and Wall Street are all in bed together. 

 

 

 

 

 

Apr 3, 2012 2:46PM
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-122.61.............​.....Song title......."How do ya like me now"..... by Obama. Vote Obama out in 2012!!!!!!
Apr 3, 2012 2:50PM
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It’s apparent that the Federal Reserve policymakers would rather have the Government continue to make unemployment payment out of the tax payer’s dollars than loose a few bucks themselves by stimulating the Market and promoting economic growth.

The winners and losers here is everyone: until the economy can stand on its own we all need to do our part. We have done ours now it’s your turn to support economic growth and forgo your greed and arrogance.    Not as Democrats or Republicans but as AMERICANS.

Apr 3, 2012 2:25PM
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ok there are several factors that encompass high oil prices. First off you have a weak dollar, oil is priced all around the world by the dollar so if the dollar is weak more people can afford to get in the market to pull a profit. second you have several oil producing countries that have problems with the uprising of their people. not to mention the problems with Iran. Also you have a volatile stock market that investors dont like to take the risk in so they turn to something that is making major profits like oil and gold and silver. Investors need to realize that in order for the stock market to straighten out they are going to have to get out of the commodities market. Only when they untie the hands of the people and lower the prices of everyday required things like gas and electric will we have money to go to the store and spend some of our extra money. It is all a chain reaction if the investors get out of the oil market the prices go down. when gas and energy prices go down we have spare income. when we have spare income we treat our selves and our families to a night out or shopping. when we spend our income we provide companies with boosted revenue and demand. when companies have demand they hire more people to fill that demand. when companies higher more people it creates more tax revenue. also the companies have more profit which is then passed back to the investors by dividend payments or higher stock prices. And all it takes is for investors to put their money where it belongs in the stock market not in comodities.
Apr 3, 2012 3:39PM
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Speculators are the reason why oil prices cannot and will not drop because they are buying so many futures ahead that they are manipulating prices to keep them high. Make these people take physical inventory of all of the futures they are buying ahead and than see how many they buy. They already have set quotas, but the CTC will not enforce them, so big corporations like Goldman Sachs are reeling in the profits off oil while they are burying the average American Consumer at the pumps. Stop the speculation now before our economy sinks once again.
Apr 3, 2012 3:49PM
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Oil prices fall ****  gas prices up 18 cent today wtf time to get rid of speculation. Why should they have a job for screwing up the world economy. My azz would be shot..
Apr 3, 2012 4:48PM
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If Obama is to win the election, he should get rid of Bernanke.

The Fed has spent the last 15 years punishing the old Senior Americans.

Apr 3, 2012 4:23PM
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Good! I am so dang sick of the *&^%*( Fed artificially stimulating the stock market while thousands of savers/retirees/seni​ors are starving because they don't get any interest income from Bernanke's 6 year 0% scorched earth campaign.
Apr 3, 2012 3:12PM
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Sick and tired of the racist card being played. It is NOT about race, it is about this administration's corrupt policies. We will hear more when Obama gets voted out of office in 2012!
Apr 3, 2012 5:18PM
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If Obama is to win the election,

HA HA HA HA HA HA HA HA HA HA HA...............You​ know what though?  He just might. I think he already has enough people asking the question "Ask not what you can do for your country, but what can your country do and give to you." Remember he's that "change" that everyone is looking for. I'm not sure yet who I'm voting for in the next election, but I do know who I'm NOT voting for.  Unlike a few people on this site I don't need the government's or "Barry"s" help to stand on my own two feet, what I need is for them to stay the hell out if my way and out of my business.

Apr 3, 2012 3:37PM
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Dexter- 18 months ago the dollar was worth 74 cents and now it fluctuates around 72 cents.  Oil prices are set on the World Market by energy traders speculating in futures, not by demand because the demand has been dropping steadily for two years. 

 

True presidents don't set oil prices but THEY do appoint people who make policies that do effect oil prices, OR they appoint key people that look the other way while irregularities are taking place ( SEC, EPA anybody?).  Oil prices went down after the market tanked in 2008, then started steadily going up again with each round of stimulus dumped into the system by a Fed chairman nominated by Obama and confirmed by a Democrat Senate.  I also think GW Bush was just as guilty of financial foul ups as Obama.  

 

For the record I didn't say give every tax paying household $100,000.  Since Bernanke is going to placate Wall Street and the Banks with more money anyway my suggestion was that instead of dumping the money into the few put it where it would at least go back into the system instead of a bank vault.  I too have worked all my life in everything from painting and construction to transportation.  I took a lot of jobs I didn't like but did so to feed my family.  I was a single parent at 40 raising a son when I went to college for the first time.  Those that want to work will find something , unfortuately with this administrations policies you will have to work two or three jobs at the lower going rate just to survive.

 

 

Apr 3, 2012 4:51PM
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Whaaaaaat? The FED. does not see a need for more stimulus at this time?  I'm shocked. Maybe Bernanke is finally figuring out what I already knew. QE is nothing more than a anabolic steroid for the "market" it pumps it up and makes it look bigger and badder than what it really is. If this "recovery" is for real the next thing they should seriously look at is raising the interest rates (which they will do regardless after the election)
Apr 3, 2012 4:56PM
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And why should the government give more stimulus?  Why doesn't Wall Street or should I say the entire financial market create their own stimulus? Oh, that's right, they want somebody else to make a proposal and if they don't like it they will make the stocks drop and if they like it they will rise.  And then in typical Wall Street fashion they will then say the next day that they don't feel it will be enough!!!!!  All it would take is for Wall Street to have a positive attitude about things and I'm sure that the financial condition of the world we be much better.  But then again seeing that Wall Street allows the investors to make generous amounts of money whether stocks go up or down why would they be positive about things? Wall Street is no different then most people who want the government to hand them an apple on a silver platter instead of having to work for it.  What a bunch of Butt Heads!!!!!
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