Dow off 179 on Greek worries, economic weakness

Investors pummel stocks as turmoil in Greece hits markets globally. The major averages have fallen more than 7% since April. Pandora Media shares jump -- then fade -- as trading starts. Oil falls below $95 a barrel.

By Charley Blaine Jun 15, 2011 1:11PM
Charley BlaineUpdated: 11:24 p.m. ET

The question with Tuesday's rally was whether it was a one-day wonder or the start of something big. The short answer: It was a one-shot rally.

Stocks slumped today, with the major averages giving back all of Tuesday's gains -- and then some. Traders were worried about global growth, domestic inflation and indications that the Greek debt crisis was spinning out of control. Moody's put the top three banks in France on review for a possible downgrade.

There was some cheerful news -- at least at the open -- about Pandora Media (P), the Internet radio company. Its shares opened at $20, up 25% from the $16 price the shares fetched when the company went public late Tuesday, and quickly reached $26.

But the shares fell back and closed up 8.9%, to $17.42. There wasn't quite the euphoria about this stock that there was about LinkedIn (LNKD), whose shares more than doubled on its first day of trading. 

Pandora's lot may be a function of a weak stock market and investor wariness about buying a stock in a company that's never earned a full-year profit.

The Dow Jones industrials ($INDU) closed down 179 points, or 1.5%, to 11,897. The blue chips fell to as low as 11,862 today and have been below 12,000 for three of the last four sessions. The Standard & Poor's 500 Index ($INX) was down 22 points, or 1.7%, to 1,265, breaking below a strong support level at 1,272. The Nasdaq Composite Index ($COMPX) was off 47 points, or 1.8%, to 2,631.

Article continues below.
The drubbing trimmed the Dow's gain for the year to 2.8%; the blue chips had been up 10.7% after peaking on April 29. The S&P 500 is up just 0.6%, while the Nasdaq is off 0.8% for the year. Since that April 29 peak, the Dow and S&P 500 have fallen a bit more than 7.1% since peaking on April 29; the Nasdaq is off 8.5%.

The Dow Jones Transportation Average ($DJT) is off 7.4% since the end of April. The Philadelphia Semiconductor Index ($SOX) is down 11.4%, and the NYSE Arca Networking Index ($NWX.X) is down 17.1%.

The worries about Europe sent the dollar surging against major currencies. The euro fell to $1.41844 and has fallen more than 5% since peaking on May 4 at $1.4939. The 10-year Treasury yield fell to 2.995% from Tuesday's 3.099%.

The dollar rally has pushed oil and other commodities lower. Crude oil (-CL) was down $4.56 to $94.81 a barrel. Crude has fallen 16.8% since the end of April. Brent crude was off $3.06 to $117.10 a barrel.

Gold (-GC) had reached as high as $1,535.70 an ounce but fell back as the Greek situation intensified. It settled at $1,526.20, up $1.80 on the day and was trading above $1,531 an ounce at 5:05 p.m. ET. Silver (-SI) settled down slightly at $35.41 an ounce but also was trading higher electronically. Copper (-HG) settled down 3.3 cents to $4.122 a pound and was flat after hours.

Corn and wheat futures were sharply lower on expectations of big crops globally this year.

Coming Thursday: RIMM earnings, jobless claims
Futures trading suggests that stocks will open slightly lower on Thursday. To be sure, the markets will face some challenges. In addition to Greece, the biggest challenge will be the market's reaction to the weekly report on jobless claims, due before stocks open.

That will be followed at 10 a.m. by the monthly Philadelphia Federal Reserve Bank's monthly report on manufacturing in the Middle Atlantic region. Research In Motion

And the Commerce Department will report on housing starts for May.

The most important earnings report will come after the close from Research In Motion (RIMM), the maker of the BlackBerry smart phone. The company is expected to earn $1.32 a share in its fiscal-first quarter, down from $1.38 a share a year ago. Revenue is expected to jump 21.3% to $5.14 billion.

Shares are down 18% this month and 39% for the year because of the company's struggles to mount an effective counter-attack to Apple's (AAPL) iPhone.

Greece's woes batter the euro

The euro dropped the most in more than a month against the dollar after Greece's government lost political support as the European Union struggled to break a deadlock on a second financial rescue for the nation. 


In a televised address late today, Greek Prime Minister George Papandreou said that he would reshuffle his cabinet and demand a vote of confidence in parliament.

The announcement came as police clashed with protesters in Athens who were marching against austerity measures required to receive the next disbursement of a bailout package aimed at helping Greece avoid a debt default. Finance Minister George Papaconstantinou, the architect of the unpopular measures, is likely to lose his position in the reshuffle. 


Papandreou had earlier offered to step aside to facilitate forming a national unity government with the country’s biggest opposition party.


Police fired tear gas at 20,000 people who encircled the Parliament House today in protest of Papandreou’s additional wage cuts and tax increases. The nation’s two biggest unions were on strike. 


Energy prices -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Crude oil (-CL)

$94.81

$99.37

-7.68%

3.75%
(per barrel)











Heating oil (-HO)

$2.98

$3.13

-2.23%

17.34%
(per gallon)











Natural gas (-NG)

$4.58

$4.58

-1.91%

3.90%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.92

$3.06

-7.20%

19.17%
(per gallon)











Brent crude 

$117.10

$120.16

0.32%

23.59%
(per barrel)











Retail gasoline

$3.69

$3.70

-2.41%

20.08%
(per gallon; AAA)












Energy, metal, bank stocks are the day's laggards
Energy, materials and financial stocks were by far the market's weak sectors.
The Financial Select Sector SPDR (XLF) exchange-traded fund was down 2.2% to $14.73. Bank of America (BAC) was the second-worst performer among the 30 Dow stocks, down 2.8% to $10.50 after hitting a 52-week low of $10.41. Wells Fargo (WFC) was off 1.7% to $26.55.

All 10 S&P 500 sectors and all 30 Dow stocks were lower. McDonald's (MCD) and Walt Disney (DIS) were the best performers, down 0.3% to $81.24 and 0.5% to $38.39, respectively.

Only 19 S&P 500 stocks and three Nasdaq-100 ($NDX.X) stocks were higher on the day. The Nasdaq-100, which represents the largest Nasdaq stocks, was off 39 points, or 1.8%, to 2,211.

NetApp (NTAP), up 1.4% to $50.55, was the Nasdaq-100 leader, followed by Warner Chilcott (WCRX), up 0.1% to $23.07, and Green Mountain Coffee Roasters (GMCR), barely higher at $79.85.Boston Scientific (BSX), up 2.8% to $6.93, was the S&P 500 leader.

Alcoa (AA)Home Depot (HD) and  Caterpillar (CAT) were the Dow laggards, falling at least 2.3% on the day because of the disappointing data on manufacturing, industrial production and homebuilder confidence. Ford Motor (F) fell 2.1% to $13.15 after saying pretax profit will be lower in the second half than in the first half.

A bad day for economic data
Industrial production grew by 0.1% in May after showing no change in April, the Federal Reserve said today. May’s level fell short of expectations for growth of 0.2%. Capacity utilization remained unchanged at 76.7% in May, which was downwardly revised from April’s initial level of 76.9%. Economists had expected utilization to tick up to 77% in May.

Stocks also fell as a report showed that manufacturing in the New York region unexpectedly shrank in June, a sign the industry still faces parts shortages following the March 11 earthquake and tsunami in Japan.
 
Consumer prices rose 0.2% in May, the Bureau of Labor Statistics said. That was slightly ahead of the 0.1% uptick that economists had expected. The core rate, which excludes volatile food and energy prices and is considered the closest gauge of inflation, gained 0.3%, outpacing expectations for an increase of 0.1%. In April, consumer prices rose 0.4% and the core rate grew by 0.2%.

The National Association of Home Builders said its housing market index fell to a reading of 13 in June, from May’s level of 16. The market had been anticipating no change from May’s reading.

Short hits from the markets -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.05%

0.06%

0.00%

-58.33%
5-year Treasury note 

1.55%

1.69%

-8.29%

-23.21%
10-year Treasury note

2.97%

3.10%

-2.52%

-10.05%
30-year Treasury bond

4.20%

4.30%

-0.40%

-3.74%
Currencies











U.S. Dollar Index

76.072

74.692

1.84%

-4.06%
British pound

$1.62

£1.64

-1.78%

3.66%
(in U.S. $)











U.S. $ in pounds

£0.62

£0.61

1.81%

-3.53%
Euro in dollars

$1.42

$1.44

-1.81%

5.92%
(in U.S. $)











U.S. $ in euros

€ 0.71

€ 0.69

1.85%

-5.59%
U.S. $ in yen 

81.10

80.51

-0.65%

-0.32%
U.S. $ in Chinese

6.50

6.48

0.05%

-1.67%
yuan











Canada dollar

$1.021

$1.033

-1.25%

1.78%
(in U.S. $)











U.S. dollar 

$0.980

$0.980

1.25%

-1.74%
(in Canadian $)











Commodities











Gold (-GC)

$1,526.20

$1,524.40

-0.69%

7.37%
(per troy ounce)











Copper (-HG)

$4.1215

$4.155

-1.34%

-7.32%
(per pound)











Silver (-SI)

$35.406

$35.411


-7.56%

14.46%
(per troy ounce)











Wheat (-ZW)

$7.085

7.3125

-9.43%

-10.80%
(per bushel)











Corn (-ZC)

$7.2575

7.555

-2.91%

16.59%
(per bushel)











Cotton 

$1.5196

1.5554

-4.23%

4.94%
(per pound)











Coffee

$2.6265


2.6925

-0.74%

9.21%
(per pound)











Crude oil (-CL)

$94.81

$99.37

-7.68%

3.75%
(per barrel)












100Comments
Jun 15, 2011 1:56PM
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Fastest Way to Economic Recovery: Institute a flat tax and eliminate all loopholes and subsidies, this includes for corporations.  Lower the overall corporate tax rate to below the European average, but eliminate all loopholes, so that some corporations are not paying 35%, while others with the "right" products and lobbyists pay 15% or less.  Let any business that wants to set up here have a lower tax rate than it would get in Europe as an incentive to stay here.

 

Eliminate all govt/business hybrids, starting with home loans.  Close Fannie and Freddie tomorrow and shoot anyone who says the govt should help people get $300,000 mortgages if they don't quite qualify on their own.

Jun 15, 2011 2:02PM
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We are in a double-dip recession which I hope doesn't lead to a depression.  What scares me the most is that basic products like gas, milk, and meat are skyrocketing.  How can families living on the margin survive now?  Food shelf donations are down, there is more need, and next winter will be a nightmare in terms of fuel costs.
Jun 15, 2011 1:52PM
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I am not a "stock expert" of any kind. But given the recent story on 60 Minutes about the super computers doing as much as 70% of the trading on Wall Street, it's easy to see there is no real connection about the current state of the economy for those of us working people and the movement of the stock market. When the Dow goes up, the reporters find reasons to support that direction. And when the Dow goes down, those same reporters find other news to explain the fall. But the truth is, Greece has been having problems for over a year, the housing has been in problems for three years or more, unemployment has been too high for two to three years and a change one tenth of a percent in any direction will not reflect with any accuracy the direction of the economy. All of these ups and downs exemplified on Wall Street are hardly of any value to any of us who do not trade stocks. If the market reflected accurately what was going on, we would already have a Dow below 9,000. So keep up the good work Wall Street and enjoy your game while it exist. Your ride is almost over.
Jun 15, 2011 2:25PM
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Sorry midwest but the second great depression is NOT a question anymore...it is coming and NO ONE will stop it...We have brought this upon ourselves as a Nation with leaders (plural) who dont have a clue how to properly run a Nation.
Jun 15, 2011 1:30PM
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One day the market is up big, the next day down big. Does anyone really think that only fluctuating world conditions cause this huge daily market volatility? Or, do all of us now know that the Wall Street Big Casino does that with the full approval of Washington?

 

More volatility, more fear, thus more trade commissions and trade profits, short and long. Duh.

 

Does WS think it is fooling us? It does not care what we think as long as we make it money.

Jun 15, 2011 1:43PM
avatar
The great American pyramid scheme is coming to an end.  The rich got richer and the rest of America will pay for it.  I have worked all my life trying to make a decent living, investing in  my 401k and trying to live a middle class life like m y parents, and after the recession I am in the worst financial shape after being unemployed for 2 years and having to recently  take a job making half of my previous income while working overtime 10 to 25 hours per week.  With millions of other Americans in the same shape this country, we are heading for a deeper recession.  Thank you corporate America for transferring jobs over seas or paying less for those jobs in the US.  Remember this at election time as both parties are bought by big business
Jun 15, 2011 2:00PM
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Yesterday we had a one day rally. This was to entice these stupid day traders to pump some of their grocery and house payment money in so the manipulators could take it all back. Pay attention and you'll see a trend. Stagnate market with a little up and downs from the big boys, then all of a sudden a one day surge. Next few days big boys take all the new money out. It's so obvious and people like my delusional neighbor (owns a landscape co) get soaked.... Stock Market is a sham.
Jun 15, 2011 1:49PM
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Wall Street wants Ben to inject another 600 billion so the top 1% can take that off the table too, while the bottom 99% of Americans pay more for everything and get nothing but the bill.........
Jun 15, 2011 1:58PM
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Yesterday the economy is strong & booming, today its weak.  So much for the fools who think that they know it all.   Try predicting the weather for a change.   At least you may have a 50/50 chance of getting it right some of the time.
Jun 15, 2011 3:02PM
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<aking a speech a day is not going to get this country fixed.

Campaigning for President 4 years in advance is not going to fix this country.

NAFTA or SHAFTA is not working. Tax the items heavily that are being sent or moved out of country.

In order to bring other counties up to us, we have had to be taken down.

The ulterior motives of our government has us broke.

Back to basics. Illegals out, NAFTA out.Back to basics of what our government was meant to be.

Get back in Washington and work.

Jun 15, 2011 3:30PM
avatar
Those Jack Asses run the market up and down over 500 points in a week, and they make money both ways. Our Economy sucks and it does every day  not  once a week.
avatar
Hope everyone sold on yesterday's rally like I advised.

Things are starting to move at a pace not seen in a while. And the direction is down. 

There are so many factors weighing on the US economy and world economy right now that a collapse is just around the corner.

The US is technically in default on it's national debt for about the last decade. Clinton was the last president to have a surplus in the national budget. The US has been borrowing money not only to pay the bills but to pay the interest on the national debt for years now. Pretty much this is a technical default. And with Congress unable to get the economy going again as they refuse to build manufacturing plants and hire 10,000,000 workers at $100,000 a year and allowing half of Americans to make less than $26,500 a year now vs $32,000 a year 4 years ago. With inflation of 5 percent (real not the imaginary inflation designed by policticians to cheat senior citizens out of their S.S. cost of living increase which saved $30 billion this year alone) the drop in lower and middle class workers has been 1/3 of their wages.

There is a mass exit of state and local government workers as they fear reductions in their pension benefits so they are retiring now. As most will get 90 percent of their last year's salary this will put a huge burden on the states as now they have to replace the workers and still pay the old workers about the same amount of money. State pension plans will now have to double the drain on their pension plans (read stock market) to pay these retired people and there are more retired workers for the states than there are current workers. 

Plus 10,000,000 retired baby boomers are now taking more out of the stock market than those of us left behind are putting into the stock market. And even those of us still working do not believe the money is going to be there in the 401k pension plans so 1/3 of us have already borrowed money from it as our House ATM machine quit working. Of course as more and more people use their 401k pension plan as an ATM machine this will also dry up.

I really do not see anything but more and more down turn for the economy.

Strangely big business is still firing more expensive workers and moving the jobs overseas. The $2 trillion dollars they are suppose to be holding unto has already been spent in China and India building more and more manufacturing plants there.

We are facing a loss of jobs causing an ever weaker economy cycle right now and we can not break out of it.
Jun 15, 2011 1:46PM
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We need to let Greece waller in it's own grease.  Greece amounts to about 1/10000th of the world economy and population,  Lets take care of "our own" for a change.
Jun 15, 2011 1:42PM
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Ask the average middle class American about the economy and this is no big shock. The only people shocked appear to be the state run media, the politicians and the idiots on WS who think we don't know they control the government.
Jun 15, 2011 2:02PM
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what i don't understand is the "it's both partys that did this"   this is greece ,   they allowed the union contracts to gain control of the economy .   now the entire country is trying to support the benefits to union workers .   when the government says this the unions riot in the street .   does this sound familiar ?
Jun 15, 2011 1:53PM
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I worked in the business sector for 40+ years and all i heard every year was we need to produce more so we could make a greater profit.  They were always shooting for 10%; and were sadly disappointed when it was only 3 or 4%.  How greedy can they be?  I would say any growth; especially in a slow or even down market or economy was fantastic; but then again i guess i just wasn't greedy enough.
Jun 15, 2011 1:41PM
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Once again Ole Charley likes to downplay the reality of today's dismal performance.  Stocks are down almost 200 points and his headline is..."Stocks Slide on Economic Weakness".  If even the market was up 10 points his headline would be "Stocks Soar" etc.  As my buddy always says...sometimes you can't make chicken salad out of chicken sh*t.  Our economy stinks and will more than likely get worse before it gets better so tell it like it is and stop trying to sugar coat it.  Until we accept what the reality is we will never be able to come up with a solution.
Jun 15, 2011 3:01PM
avatar
This inflation is not on the shoulders of the last administration as the inflation was nothing like this.    This compares with the Jimmy Carter term where he too was ignorant in business, just like this genius in the WH now.  He also isn't too smart when picking advisors.SmileSmile
Jun 15, 2011 3:11PM
avatar
So the slick market was up 124 yesterday and down 189 at 2:00 pm today.... ANYONE that calls this an honest market is a fool. Manipulators are eating your money up and hiding behind media idiots that are paid by,,,, Whom ??  My delusional neighbor that owns a landscape company.... That's right a landscape company.... Fell for this get rich quick day trading nonsense and the last I heard he lost OVER $40,000. This slick market is the place for fools to get their pockets picked by the big boys !!
Jun 15, 2011 2:08PM
avatar

Yesterday's rally was Permanent Open Market Operations funds dumped into the system along with some QE2.  This nations economy is in the tank; there is not or ever has been a recovery other than the stimulus driven Wall Street recovery.

 

With unemployment at a reported 9.1% (realistic 18%) and the stock market going in the tanks you can bet there will be another round stimulus coming and our dollar dropping more in value.  No presidential adminstration has ever been re-elected with both high unemployment and a weak market so there is going to more focus on pumping up the stock market since the employment issue can't be solved expediently.

 

 

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