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.
Updated: 11:41 p.m. ETStocks 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.
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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) | ||||||||||||
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.
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.
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.
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.
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.
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.
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