Fed hints of more stimulus help stocks trim losses
An 83-point loss for the Dow shrinks to 31 points as minutes show the Federal Reserve inching toward a new economic stimulus plan. Hewlett-Packard earnings beat estimates, despite soft PC sales. Dell sags. Housing shows some strength.
Updated: 8:45 p.m. ETStocks came back from their lows of the day after the Federal Reserve strongly hinted that it is prepared to start a new round of economic stimulus soon, perhaps by mid-September.
The Dow Jones industrials ($INDU) saw an 83-point loss drop to 31 points. The Standard & Poor's 500 Index ($INX) and the Nasdaq Composite Index ($COMPX) ended with small gains.
Hewlett-Packard (HPQ) shares fell 92 cents, or 4.8%, to $18.28 after hours even as earnings after a huge write-down beat Street estimates.
Housing provided a bit of cheer. Existing home sales rose 2.3% in July from June, and prices were up 9.4% from a year ago, the National Association of Realtors said. Toll Bros. (TOL), reporting a big profit gain, said it was seeing the best demand in five years. Builders D.R. Horton (DHI) and PulteGroup (PHM) were the top performers among S&P 500 stocks.
The Dow closed at 13,173; the blue chips had been off as many as 83 points. The S&P 500 was up very slightly to 1,413, and the Nasdaq gained 6 points to 3,074. The Nasdaq-100 Index ($NDX), dominated by Apple (AAPL), was up 11 points to 2,783. Apple hit a new closing high of $668.87, up $12.81.
Article continues below.Gold (-GC) settled down $2.40 to $1,640.50 an ounce. Silver (-SI) and copper (-HG) were higher.
Crude oil (-CL) for October delivery settled up 42 cents to $97.26 a barrel. Brent crude was up 66 cents to $115.30.
Interest rates were lower, with the 10-year Treasury yield falling to 1.719% from 1.805% on Tuesday.
Crude oil has been rising as sanctions against Iranian oil exports take hold and speculation built that Israel may attack Iran sometime this fall to prevent the country from developing nuclear weapons. One report said Prime Minister Benjamin Netanyahu wants to attack before the U.S. presidential election on Nov. 6.
Thursday brings the weekly report on jobless claims as well as Commerce Department report on new-home sales in July. Earnings are scheduled for medical-supply company Patterson Companies (PDCO) and Salesforce.com (CRM).
Futures trading suggests stocks will open slightly higher on Wednesday.
HP gains despite revenue gains
HP shares were off 73 cents to $19.20 in regular trading, largely in sympathy with the weak guidance offered late Tuesday by Dell (DELL). Dell was off 66 cents to $11.68.
But early reaction to the company's corporate results have faded.
On the analyst call, Hewlett-Packard CEO Meg Whitman said the company's performance reflected its being in the early stages of a turnaround.
Personal-computer revenue fell 10% from a year ago but was flat from the second quarter.
Desktop sales were down 6%; notebooks were off 12%. Consumer and business sales fell. Printing was down 3%, better than the second quarter's 10% decline. Its operating margin improved 260 basis points. Services revenue was off 3%.
Enterprise hardware was down 4% with rising networking sales offset by declines in service and storage market shares. Software revenue jumped 18%, boosted by Autonomy, but license growth is only 2%.
HP also cut 4,000 jobs in the quarters and expects 11,500 more by the end of fiscal 2012.
The company reported a loss of some $9 billion under generally accepted accounting. Just about all of the loss was related to a writedown of most of the value of its 2008 purchase of data-services company EDS. HP bought the company for $13.9 billion.
Excluding the writedown, HP lost $4.49 a share. Excluding it, the company earned about $1 billion, or $1 a share. The profit was 2 cents more than Wall Street had expected. Revenue was $29.7 billion, down from $31.2 billion a year ago.
| Energy prices -- New York close | ||||||||||||
| Wed. | Tues. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $97.26 | $96.84 | 10.45% | -1.59% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $3.1287 | $3.1243 | 9.86% | 7.36% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $2.8260 | $2.7750 | -11.94% | -5.45% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $3.1042 | $3.0652 | 11.89% | 16.81% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $115.04 | $114.64 | 9.65% | 7.13% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.7160 | $3.7170 | 6.17% | 13.43% | ||||||||
| (per gallon; AAA) | ||||||||||||
More help coming from the Fed
The economic worries were the top forces weighing on markets at the open, with U.S. stocks following European stocks lower.
Then came the minutes from the Fed's July 31-Aug. 1 meeting. They show policy makers remaining concerned about economic prospects, with Europe the focal point. The minutes suggest the Fed will announce in September that low interest rates will remain in place until at least 2015. The Fed had previously said it expected rates to be low until 2014.
As important, the minutes suggest the Fed may soon start a new program of bond purchases, often called quantitative easing, unless the economy shows sustained and sustainable improvement. The Fed's next meeting is Sept. 12-13.
Meanwhile, the Congressional Budget Office warned the U.S. economy will slide into recession in 2013 if Congress fails to act to maintain current tax rates and avert deep cuts to federal spending.
Europeans are starting to grapple again with their debt crisis, and the divisions on how to fix the program are still stark.
The global worries were best seen in lower shares of construction-equipment makers Caterpillar (CAT), down $1.57 to $88.72; Joy Global (JOY), off 4 cents to $57.87; and Manitowoc (MTW), down a penny to $13.09. The trio sell to customers around the world and have benefited from Chinese economic growth.
That growth appears to be flagging. So much so that Australian mining giant BHP Billiton (BHP) decided to shelve for now plans to expand its Olympic Dam mining project in Australia. Olympic Dam has the world's fourth-largest copper deposit and largest uranium deposit.
BHP Billiton shares in New York were up 21 cents to $69.70.
The worries about Europe re-emerge
European markets were broadly lower as investors awaited talks between Greek Prime Minister Antonis Samaras and eurozone leaders this week.
Samaras is expected to ask for more time to meet austerity measures required for the country to receive bailout funds, The Wall Street Journal said.
The markets were pressured on reports that Eurogroup chief Jean-Claude Juncker said there would be no decisions on aid to Greece until a report due in October.
DuPont, Home Depot lead the Dow
Sixteen of the 30 Dow stocks were higher today, led by DuPont (DD) and Home Depot (HD). Hewlett-Packard and Caterpillar were the laggards.
Only 197 S&P 500 stocks were higher, led by D.R. Horton, Pulte and Discover Financial Services (DFS). R.R. Donnelly (RRD) and Dell were the laggards.
Only 45 Nasdaq-100 stocks were higher, with Autodesk (ADSK) and Alexion Pharmaceuticals (ALXN) the leaders. Dell and for-profit education company Apollo Group (APOL) were the laggards.
| Short hits from the markets -- New York close (updated) | ||||||||||||
| Wed. | Tues. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.1000% | 0.100% | 0.00% | 900.00% | ||||||||
| 5-year Treasury note | 0.713% | 0.792% | 19.03% | -14.10% | ||||||||
| 10-year Treasury note | 1.719% | 1.805% | 15.21% | -8.12% | ||||||||
| 30-year Treasury bond | 2.825% | 2.909% | 9.62% | -2.22% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 81.497 | 81.920 | -1.47% | 1.21% | ||||||||
| British pound | 1.5881 | 1.5790 | 1.27% | 2.21% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.630 | £0.633 | -1.25% | -2.16% | ||||||||
| Euro in dollars | $1.25 | $1.25 | 1.91% | -3.26% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.798 | € 0.802 | -1.87% | 3.37% | ||||||||
| U.S. $ in yen | 78.74 | 79.29 | 0.79% | 2.13% | ||||||||
| U.S. $ in Chinese | 6.37 | 6.35 | 0.24% | 0.75% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $1.009 | $1.012 | 1.21% | 2.86% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $0.992 | $0.989 | -1.12% | -2.79% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,640.50 | $1,642.90 | 1.86% | 4.70% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $3.455 | $3.453 | 1.08% | 0.54% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $29.556 | $29.4280 | 5.88% | 5.88% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $9.170 | $9.2200 | 3.24% | 40.48% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $8.3475 | $8.368 | 3.66% | 29.12% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $0.7697 | $0.773 | 7.89% | -16.04% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $1.621 | 1.642 | -7.05% | -29.41% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $97.26 | $96.84 | 10.45% | -1.59% | ||||||||
| (per barrel) | ||||||||||||
Jeez ... what a surprise!! With the debt we have and goin up $1 trillion for the 4th straight year, the economy has no where to go but down.
So .. economy is going down, unemployment is going up .... foreclosures are going up and gas is going up and will be at $4.00 very soon.
Anyone who thinks that Obama has a chance in Nov .... you are dumber than my dog .. MAX!
Ya gotta love the headline: Fed hints at more stimulus....
Hhhmm, what does stimulus do? I'll tell you.
It artificially raises the prices of stocks by creating false demand. Since the market just hit a new four year high, then exactly what is the purpose of the stimulus since stocks have already risen?
I'll answer that too. It's not about the economy, it's about Bernanke and Company getting Obama re-elected so they can keep their jobs, and keep their Goldman Sachs buddies happy. Quite ironic considering how much liberals hate banks and Wall Street.
As I've posted a few times now, we don't have a stock market anymore, we have a Fed / ECB watch market, with a bunch of Pavlovian investment bankers sitting like dogs at Bernanke's feet waiting for him to ring the bell.
Get the Fed out of the market manipulation business!
The Death Spiral of Lost Jobs and an ever weaker and weaker economy is accelerating now folks.
QUOTE
August 22, 2012 12:52 PM ET
By HOPE YEN
WASHINGTON (AP) - The share of the nation's income earned by the middle class has fallen to its lowest level in recent decades. It's been surpassed by affluent earners as median wages stagnate and wealth concentrates at the top in a relatively weak economy.
A study by the Pew Research Center highlights the diminished share for the roughly half of U.S. adults who define themselves as "middle class," with incomes ranging from $39,000 to $118,000.
The report describes this group as suffering its "worst decade in modern history," having fallen backward in share of income for the first time since World War II and losing faith in the future.
In all, 85 percent of middle-class Americans say it is more difficult now than a decade ago to maintain their standard of living.
END QUOTE
Monetary Policy - currency debasement / wealth confiscation scheme.
Social Security - ponzi scheme
Medicare - reverse population pyramid scheme
Global cooling (1970s) - oops didn't happen and then happened and then ....
Global warming - happened and then reversed, etc...
Climate change - been happening for millions and millions of years, BUT we now try to use it for lost political causes by claiming it is man made.
More counterfeit money from the Fed thrown to Wall St. means $5 gas,higher food and higher
commodity prices but still no inflation because necessities are not included in the inflation
figures.Hopefully hungry people will trigger the revoloution.We are slaves to Wall St. and both
political parties are to blame.
The trouble with raising taxes on the rich is how you define rich. Warren Buffet could easily be called rich, but our dear leader and his party, are going after the millionaires and billionaires making 200K! Many of these are small business owners that file their small business income on their personal returns. This adds more cost to them and they will respond by either hiring less folks or cutting somewhere else. This leads to less commerce any way you slice it.
Perhaps raise the income tax on income over 1 or 2 million. I don't want to be the judge.
Besides every time marginal rates are lowered the government receives more revenue.
Why all the hate on the rich. I often read here that they stole from the middle or lower class. Hog wash.
The first 2 rounds of QE helped so much better do a 3rd. Keeping rates low on 2015, again it has helped so much why not keep low until 2115? Perhaps if people could actually save with a real rate of return like they could for the previous 2 hundred years things might improve. Stocks are not the economy, only 1 part of it.
Also if banks could lend and actually make money on loans, would they not be inclined to loan more? At these rates the return isn't worth the risk.
Tax receipts from years 2000 to 2011 totaled 25.753 trillion(lowered tax rates<Plus the biggest recession history) tax receipts from 1988 to 1999 totaled 15.427 trillion(higher tax rates) ????? Just for sake of argument lets throw 2 trillion at the wars,1 trillion at homeland security,1 trillion at unfunded prescrptions where did the extra 6 trillion of tax receipts ,all from Bush tax cuts go?
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