Gold slumps, stocks drop on euro worries

Gold falls below $1,600 an ounce as fears build that Europe's problems are getting worse. The Dow falls 131 points. Stocks of companies with big non-US sales are hit hard. Michael Kors IPO prices at $20; Zynga on deck.

By Charley Blaine Dec 14, 2011 1:55PM
Charley BlaineUpdated: 11:41 p.m. ET

Stocks tumbled today as worries piled up about Europe and its debt crisis.

The sell-off was more dramatic among commodities, beaten down as the euro dropped below $1.30 for the first time since January.

Gold (-GC) fell below $1,600 an ounce for the first time since September. Silver (-SI) dropped below $30 for the first time since early fall. Crude oil (-CL) in New York traded  below $95 a barrel, even as the Organization of Petroleum Exporting Countries agreed to cap oil production at 30 million barrels a day.

The catalysts were twofold: German Chancellor Angela Merkel's refusal to boost the size of a European bailout fund above 500 billion euros and the Federal Reserve's comment Tuesday that "Strains in global financial markets continue to pose significant downside risks to the economic outlook."

"Most markets are taking their cue from the struggling euro," Edward Meir, an analyst at INTL FCStone in New York, told Bloomberg News.

The Dow Jones industrials ($INDU) closed down 131 points, or 1.1%, to 11,823. The blue chips had been down as many as 168 points at 3:05 p.m. ET. The Standard & Poor's 500 Index ($INX) finished down 14 points, or 1.1%, to 1,212. The Nasdaq Composite Index ($COMPX) was off 40 points, or 1.6%, to 2,539, back from a decline of 53 points.

Article continues below.
Meanwhile, the Nasdaq-100 Index ($NDX) was off 35 points, or 1.6%, to 2,239. Apple (AAPL), down $8.62 to $380.19, contributed about 7 points to the index's decline.

So far this week, the Dow is off 3%, with the S&P 500 down 3.5% and the Nasdaq off 4.1%. The Nasdaq-100 is down 3.7%. Losses are quite broad so far.

Thursday brings the weekly report on jobless claims and reports on manufacturing in New York state and in the Philadelphia area, plus important earnings from FedEx (FDX), Adobe Systems (ADBE) and BlackBerry maker Research In Motion (RIMM).

FedEx is especially important because it is often seen as a proxy for the economy.

Social gaming site Zynga will also price its initial public offering after the close.

Futures trading suggests a flat-to-slightly lower open for stocks.

A beating for gold and oil
Gold settled down $76.20, or 4.6%, to $1,586.90 an ounce in New York and was trading lower in electronic markets. The settlement price was its lowest since July 13.  It's off $162.80 an ounce so far in December.

It also finished below its 200-day moving average for the first time since Jan. 21, 2009. That suggests a high degree of investor wariness about the metal. (Note: An earlier version of this post incorrectly said the breach of the 200-day moving average was last seen in December 2008.)

One reason for the recent selling comes from Tom McClellan of the McClellan Market Report, who noted that the spread between the gold lease rate in London and the London Inter-Bank Offering rate is at record levels. That's a function of credit tightening in Europe and means it's getting to expensive to borrow gold.

Silver was off $2.325, or 7.4%, to $28.935 an ounce in New York and was also trading lower after hours. Copper was down 16.3 cents, or 4.7%, to $3.2785 a pound.

Crude oil settled down $5.19 to $94.95 a barrel, its lowest close since Nov. 4. The reason: worry that a collapse of the euro will plunge Europe into a serious recession and dampen oil demand. Plus there are worries about China's economy.

Michael Kors IPO prices higher than expected
Upscale designer Michael Kors Holdings commanded a higher price tag and sold more shares than expected in its initial public offering after today's close.

The company priced 47.2 million shares -- 5.5 million more than originally planned -- of its stock at $20 apiece, above its expected $17 to $19 range. It begins trading Thursday on the New York Stock Exchange under the symbol KORS.


The 30-year-old brand, headquartered in Hong Kong, sells everything from clothing to footwear through high-end department stores such as Saks Fifth Avenue and Harrods and through its own company-operated outlets.


Chevron, Transocean sued over Brazilian spill
The crude-oil sell-off slammed energy stocks generally. But the sector was also affected by Chevron (CVX), down $3.09 to $100.53. The company and offshore-oil-drillerTransocean (RIG) were sued for $11 billion by Brazil after after an oil spill in November.

Brazil also wants the companies to shut down their operations.

Transocean, whose Deepwater Horizon rig exploded, causing the giant oil spill off the coast of Louisiana in 2010, was down $1.65 to $40.19.

The drilling accident on Nov. 7 caused an oil spill at an appraisal well at the Frade oil field, which is located in deep Atlantic waters off the coast of Rio de Janeiro state. Brazil is believed to have enormous offshore oil reserves.

Energy prices -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Crude oil (-CL)

$94.95

$100.14

-5.39%

3.91%
(per barrel)











Heating oil (-HO)

$2.8299

$2.9288

-6.45%

11.25%
(per gallon)











Natural gas (-NG)

$3.1360

$3.2790

-11.66%

-28.81%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.5037

$2.6254

-2.14%

2.06%
(per gallon)











Brent crude 

$105.02

$109.50

-4.98%

10.84%
(per barrel)











Retail gasoline

$3.2640

$3.2690

-0.94%

6.25%
(per gallon; AAA)












All euro all the time
The euro tumbled today to as low at $1.295, its lowest level since January. The currency was trading at $1.2983 at 2:20 p.m.  The euro's decline caused investors to seek safety in British pounds and U.S. dollars.

That, in turn, pushed U.S. interest rates lower. The 10-year Treasury yield was at 1.936%, down from Tuesday's 1.962%. That's still higher than the September low of 1.696%.

Speaking to lawmakers today, Merkel said there’s no easy and fast solution to the euro-region sovereign debt crisis. She's said it before, but it came as yields on Italian debt moved higher.

That was a reminder to traders that assistance to support the government bond markets in Europe isn't likely.

Stocks in Germany fell 1.7%, with French stocks falling 3.3%. British stocks were down 2.3%.

Lam Research to acquire Novellus Systems
Lam Research (LRCX), which makes equipment used in chip manufacturing, is buying Novellus Systems (NVLS) in an all-stock deal that values its peer at around $3.3 billion, The Wall Street Journal reported.

Novellus shareholders will get $44.42 a share, at an exchange ratio of 1.125 shares of Lam for each Novellus share, which amounts to a premium of about 28% over the Wednesday closing price of Novellus shares. The deal is expected to close in the second quarter of 2012.

Novellus shares were up $3.55, or 10.2%, to $38.25 after hours. In regular trading, the shares were down 61 cents to $34.70. Lam Research was off 48 cents, or 1.2%, to $39 after hours. In regular trading, the shares were off 70 cents to $39.48.

U.S. exporters are hit
The sell-off in Europe affected stocks of U.S. companies that derive large amounts of revenue from overseas markets.

Caterpillar (CAT) was the weakest performer among the 30 Dow stocks, down $3.98 to $87. The company declared a regular dividend of 46 cents a share and reaffirmed 2011 guidance. But it said it wouldn't discuss its 2012 outlook until January.

Joy Global (JOY), a Caterpillar competitor, saw its shares fall $9.11 to $75.44 after saying it sees demand for commodities remaining slow in the near term.

Boeing (BA), the single-largest U.S. exporter, was off 96 cents to $69.94. 3M (MMM) dropped 90 cents to $78.51.

But there was good news from Broadcom (BRCM), which makes communications chips used in computers and mobile devices. The company said fourth-quarter revenue was at the high end of its forecast, citing "solid" shipments. Shares were up 26 cents to $28.45.

Avon Products (AVP) rose 82 cents to $16.96. The door-to-door cosmetics seller will search for a new chief executive officer next year to replace Andrea Jung as Avon grapples with slowing sales. Jung will remain as chairman.

First Solar (FSLR) fell $9.12 to $33.45. The world’s largest maker of thin-film solar panels reduced 2011 sales and profit forecasts and said it will cut about 100 jobs.

Discount department-store operator Kohl’s (KSS) fell $1.02 to $49.34. Shares were cut to "hold" from "buy" by Deutsche Bank.

Cheniere Energy (LNG) dropped 95 cents to $8.39. The liquefied-natural-gas company said it will sell 33 million shares to repay debt.

Express Scripts (ESRX) slipped 69 cents to $43.71. The drug-benefits manager said it is in a contractual dispute related to the pharmacy benefits agreement it entered in December 2009 with WellPoint (WLP), which raised the possibility of a court fight. Wellpoint fell $1.12 to $63.52.

Financial and health care are the winners
Financial and health care stocks were the market leaders. Health care should not surprise. The stocks are defensive -- and the third-best-performing sector in the S&P 500. Financials are a surprise. They have been the weak link in the stock market for most of the year.

Only six of the 30 Dow stocks were higher, led by Merck (MRK), up 57 cents to $35.56, General Electric (GE), up 19 cents to $16.61; and JPMorgan Chase (JPM), up 22 cents to $31.51. Caterpillar, Chevron and Cisco Systems (CSCO), which also gets much of its business outside the U.S., were the laggards. Cisco was off 49 cents to $17.98.

Eighty-nine S&P 500 stocks were higher. The leaders were Avon Products and insurance company Progressive (PGR), up 58 cents to $18.57. First Solar was by far the laggard.

Nine Nasdaq stocks were higher, led by Vertex Pharmaceuticals (VRTX), up $1.88 to $30.54, and Illumina (ILMN) up $1.25 to $27.21. First Solar, F5 Networks (FFIV), down $5.29 to $104.65, and Green Mountain Coffee Roasters (GMCR), down $2.23 to $47.72, were the laggards.

Short hits from the markets -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0500%

0.050%

400.00%

-58.33%
5-year Treasury note 

0.848%

0.849%

-10.92%

-57.94%
10-year Treasury note

1.901%

1.962%

-8.08%

-42.48%
30-year Treasury bond

2.905%

2.999%

-5.13%

-33.40%
Currencies











U.S. Dollar Index

80.622

80.289

2.71%

1.68%
British pound

1.5588

1.5649

-0.61%

-0.11%
(in U.S. $)











U.S. $ in pounds

£0.642

£0.639

0.61%

0.11%
Euro in dollars

$1.32

$1.34

-1.90%

-1.46%
(in U.S. $)











U.S. $ in euros

€ 0.758

€ 0.748

1.94%

1.48%
U.S. $ in yen 

78.13

77.76

0.39%

-3.98%
U.S. $ in Chinese

6.39

6.39

-0.07%

-3.47%
yuan











Canada dollar

$0.974

$0.000

-0.73%

-2.93%
(in U.S. $)











U.S. dollar 

$1.027

$1.020

0.72%

3.01%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,586.90

$1,663.10

-9.34%

11.64%
(per troy ounce)











Copper (-HG)

$3.279

$3.442

-8.31%

-26.28%
(per pound)











Silver (-SI)

$28.9350

$31.2600

-11.79%

-6.47%
(per troy ounce)











Wheat (-ZW)

$5.8075

$6.0050

-5.42%

-26.88%
(per bushel)











Corn (-ZC)

$5.8075

$5.95

-4.48%

-6.71%
(per bushel)











Cotton 

$0.8479

0.8717

-6.73%

-41.45%
(per pound)











Coffee

$2.1800

2.2295

-7.98%

-9.36%
(per pound)











Crude oil (-CL)

$94.95

$100.14

-5.39%

3.91%
(per barrel)










 

120Comments
Dec 14, 2011 3:25PM
avatar
Perhaps term limits would help.  Change congress every couple of years.  That would make it an honor to serve not a high pay graft prone job.  While we are at it how about changing the pay and perk structure to where it was with the founding fathers. 
Dec 14, 2011 2:48PM
avatar
So why do Wall Street's Insiders fall for this EVERY WEEK???  They should all be fired.  I have never seen such a bunch of babies that need 'reassurance' DAILY that the world is not coming to an end.  

Here's a thought.  Let's suppose every country in the world declares bankruptcy, then what?  NOTHING CHANGES, STUPID.  People are not going to starve to death or die.  Companies are not going out of business, they are reporting RECORD PROFITS.  

Helloooo.... WHERE oh where is the brain, because no one is thinking anymore.  All they know how to do is knee-jerk react.

For all those who think/say Pres. Obama created our problems - grow up; this has been coming for a LONG time, and you know it.  You cannot have decades of unbridled spending and corporate greed and expect it to end well.  I feel sorry for the President, this is a mess and no matter who is elected President in 2012, our problems are not going to magically disappear overnight.
Dec 14, 2011 5:03PM
avatar
After all these years of printing cheap money The Government wants me to believe there is no inflation.   Everyone I talk to are complaining about the cost of everything.  Now who am I to believe the Government or the people on the street? 
Dec 14, 2011 2:18PM
avatar
WE NEVER GOT INTO A RECOVERY ,THE RECESSION TURNED INTO THE GREAT DEPRESSION 5 YEARS IN  AND AT LEAST 5 MORE YEARS TO GO
Dec 14, 2011 3:37PM
avatar

As we sit here and watch Europe implode due to their inability to get their budgets under control I wonder when our own political leaders are going to get around to balancing our own budget? I read yesterday that out national deficit grows by $49,000 a second. Its time for Congress to get off its duff and deal with the problem.

I have no faith Obama or Congress will do what is best for the country and that makes me very angry. All they care about is preserving their own power and positions.

Dec 14, 2011 2:56PM
avatar
hey, The real numbers are out for black Friday & ciber Monday.
There was an increase in foot traffic, a decrease in sales.
Too chicken to do a story on it as you all lied about how much
of a success it was reporters? Nothing like corporate media to
fill your head with a bunch of crap to spin it the way they want it.
Dec 14, 2011 2:46PM
avatar
let it fall, let it fall, let it fall daown to 1000 and the the rich will know how the working class lives on 8 to 15 dollars and hour.
Dec 14, 2011 5:04PM
avatar
I'm not convinced its the euro worries that have stocks dropping. People need to face the fact that America's got it's own worries and until things are fixed here the stocks won't be recovering anytime soon.
Dec 14, 2011 2:33PM
avatar

2008 .... and Obama comes out swinging. He's throwing lefts and rights .....

 

DOWN goes the economy

DOWN goes the housing market

DOWN goes foreign policy

DOWN goes the devaluation of the dollar

DOWN goes the number of people working

 

And it's over ..... Obama has KOed the nation!!!

 

Dec 14, 2011 4:15PM
avatar
I may sound like a broken record but, it doesn't take a rocket scientist to figure out that the World population needs oil.  I'm for alternative energy all the way  ( solar, wind, etc.) only if it works and right now it's only a fraction of what the World needs!  The best stimulus this world could get RIGHT NOW would be 1.50 to 1.75 gasoline and .85 propane.  It would put 400 to 600 dollars back into the working class population a month and that's 4,800.00 to 7,200.00 a year back in the coffers that could be spent on food, housing, transportation, you name it people will buy it.  Those numbers are for households, no imagine the businesses that shell out 10,000.00 dollars and up a month for fuel costs (farmers, school buses, public transportation, etc.)  that is in the hundreds of thousands a year.  The speculation has come and gone for months and years lets get this market and country back on its feet.  Republican, Democrat, Independent, Tea Partier it doesn't mean a hill of beans any more!!!!!!  Wake up Washington and Wall Street and see what your really doing to America!!!!!!  For heck sakes what is wrong with these people!!!!!!!!
Dec 14, 2011 2:23PM
avatar

surprise surprise !!!!!!!!  NEW worries from Europe!!!!  What is new ?  They have always been in trouble just not showing it to public like our reporters do.

  If truth would be told we have all been in trouble for years. Just been hidden so no one would know.  We have no one to blame but the leaders of the world .they want us in the dark so we don't see how they have manipulated us into thinking all is good. An blindly hand over everything to them.

Dec 14, 2011 3:12PM
avatar

stocks drop on euro worries

 

Does anyone feel like we are living in Europe.

Dec 14, 2011 3:31PM
avatar

Anyone see the BBC news report showing the South Korean 'Twin Towers' celebrating 9/11, complete with a built-in concrete smoke cloud?  The laughing South Koreans interviewed say that they like it and that their country has a right to do whatever it wishes.

 

Let's all buy South Korean stocks and bonds, automobiles too...  Sure!  Why not??

 

I think that we should get our troops out of there.   

Dec 14, 2011 3:38PM
avatar
Wall Street is worried about something and the Dow plummets...Don't jump out of the window yet folks.....It will be back up in a few days. But the time is coming when the game gets called and people will be jumping out of windows because they can't cope with reality because they have been living in a fantasy world for so long.

Dec 14, 2011 3:09PM
avatar

For some time now I have thought that the system that most needed reform was the

tax system.  But now I think in may be the one that we use to choose the people that

run this country, ie our elected officials.  Judging from the approval rating of the ones

we have been choosing over the past several election cycles we should be looking

for a new system that will allow us to choose more qualified people to operate our

government.

 

Electing people that attain a 10-12% approval rating from their bosses, the American people,

is not going to work out, but I suppose that is our fault to some extent because we are the ones that choose them to work for us.

 

I guess the real problem is the candidates for the job that we have to choose from and I'm

really not sure how that process works.

 

I guess it is just politics as usual all the way throught the system.  And my friends if this

is the best we can do we may be in for a long slide down the slippery slope.

 

Anybody have any ideas of how to rectify this.

 

Dec 14, 2011 4:00PM
avatar
Get rid of the unions, bring our companies home and start producing good affordable products again. You can't blame our manufacturers for going overseas because the cost of doing business is so high here. The unions demand more and more and more for less and less and less. A few years back I was watching the evening news and some auto union folks were on there crying and carrying on because they were struggling and were having a hard time making ends meet on what little they were making. I actually was feeling bad for them UNTIL I found out they were making $35.00 an hour and had every benefit known to man and still wanted more. I'd go overseas too.
Dec 14, 2011 3:55PM
avatar
Blah, blah blah, blah, blah! So what is new? The market is up, oh no, its down, oh yay its up, oh dread its down. Come on people! This is manipulation by the wealthly who know when it is going up and going down. They are the only ones making a dollar on this crap while the rest of us lose our retirements. We are a bunch of idiots. We love being told what we want to hear. Doesn't matter if its true or not, just pleeeeeease tell us what to do. Good grief. Eyes wide shut!
Dec 14, 2011 5:14PM
avatar

Here is the problem I see with elections. 

 

It's not the process on election day.  It's the process of choosing who is on the ballot on

election day.

 

An example is the district I live in in Indiana.  Dan Burton has been our represenative for what

seems like several decades now, but I'm sure it hasn't been that long. 

 

He has become the ultimate incumbant.  Never really challanged in the primary, primarily, pun intended, because the repupublicans know that he most likely won't be challanged in the

general eleciton and the democrats don't want to spend any money trying to defeat him. 

 

I think it was 2 election cycles ago the person that ran against him did not use his real

name and had a criminal record and he still got 19% of the vote.  This has been the type of

challange that Dan had for many cycles.

 

Then Dan's image began to get tarnished a bit by some less that admirable activities he

was caught engaging in or had engaged in in the past.  So, he meets his first real challange for a long time, but yet eeks out another victory.  Old Dan is still there and will most likely remain their until he decides to retire and become a lobbyist. 

 

Dan is the ultimate republican.  Party man all the way.  He, IMO, is why we need term limits.

 

I'm sure there are many more like Dan out there that should have been termed a long time

ago.

 

 

 

Dec 14, 2011 4:46PM
avatar

Kanrai, who ever said that Wall Street actually cares about the economy?  It's nothing more then big business!  Somebody's got to win and somebody's go to lose!  And usually it's the employees of Wall Street that win, or the really large investors!

Dec 14, 2011 3:56PM
avatar

OIL DOWN ,  GOLD IS DOWN,   I,M GOING TO DOWN SOME BEERS  LOLBeer mug

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