Dow falls 31 after recovering from early slump

The blue chips come back after an early 112-point loss. French automaker Peugeot announces 8,000 job cuts. The euro hits a 2-year low. P&G gets some new attention. Oil and gold slide. Marriott International and Supervalu sag.

By Charley Blaine Jul 12, 2012 12:23PM
Charley BlaineUpdated: 2 a.m. ET

Stocks finished lower today as worries built about global growth and the health of the domestic economy. But the major averages ended the day well off sharp lows from early in the day.

The Dow Jones industrials ($INDU) lost as many as 112 points before rebounding to a gain of as many as 26 points. But a late fade pushed the blue-chip index to its sixth straight loss, down 31 points to 12,573.

One catalyst for the slump: Berkshire Hathaway (BRK.B) CEO Warren Buffett conceded the economy is struggling. A second catalyst: investor disappointment that minutes from the Federal Reserve's June meeting gave no hint when it might launch a new round of economic stimulus. But a catalyst for the rebound: Activist investor Bill Ackman has begun building a stake in consumer-products giant Procter & Gamble (PG). P&G was up $2.30 to $63.70.

The finish sets up an important day on Friday. China reported early Friday that its economy grew at an annualized 7.6% in the second quarter. The growth was down from 8.1% a year ago and the lowest growth rate since the first quarter of 2009. Still, the report was in line with estimates. Meanwhile, JPMorgan Chase (JPM) and Wells Fargo (WFC) will report second-quarter results before the open. JPMorgan's results will be closely scrutinized for details about its huge derivatives loss, expected to run about $5 billion. Futures trading suggests a modestly higher open.

In addition to the Dow's loss, the Standard & Poor's 500 Index ($INX) dropped 7 points to 1,335, and the Nasdaq Composite Index ($COMPX) slid 22 points to 2,866. The Nasdaq-100 Index ($NDX) fell 26 points to 2,545.

Article continues below.
Apple
(AAPL), the largest influence on the index, finished down $5.53 to $598.90. It had dropped to as low as $592.68. It was Apple's first close below $600 since July 3.

Like the Dow, the S&P 500 suffered its sixth loss in a row. The Nasdaq's decline was its fifth straight. The losing streaks are the worst for the indexes since mid-May. The Nasdaq-100 loss was its fifth straight and its longest losing skein since falling for nine straight days in mid-May.

The market shrugged off a big drop in jobless claims to a seasonally adjusted 350,000, the fewest in four years. A big reason the report didn't generate excitement: Automakers have not been shutting plants down for retooling because they're scrambling to meet current demand.

P&G was the Dow's second-best performer after Merck (MRK), which jumped $1.70 to $42.91 after the drugmaker ended the late-stage study of an osteoporosis treatment because there was clear evidence of success.

The euro's tumble starts a sell-off
Stocks took their cue from the euro, which briefly hit $1.2168 against the dollar, a two-year low, before rebounding to $1.2206. A rising dollar hurts prices of commodities normally priced in dollars and hurts U.S. companies that generate large portions of their revenue from abroad.

The euro's decline -- and the dollar's gain -- was due in large part to French automaker Peugeot's (PEUGY) announcement it was laying off 8,000 workers and shutting down one of its oldest plants next year.  The company already was cutting 6,000 jobs. Peugeot was off 8 cents to $8.62 in New York.

The announcement surprised the French government and stunned European financial markets. France's CAC-40 Index ($FR:PX1) index fell 22 points to 3,135. Germany's Xetra Dax Index ($DE:DAX) fell 35 points to 6,419, and the United Kingdom's FTSE-100 Index ($GB:UKX) fell 56 points to 5,608.

Crude oil (-CL) in New York settled up 27 cents to $86.08 a barrel. It had been as low as $84.21. Brent crude was up 50 cents to $100.73 a barrel. Gold (-GC) settled down $10.40 to $1,565.30 an ounce.

The 10-year Treasury yield fell to 1.479% from 1.498% on Wednesday.

Energy prices -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Crude oil (-CL)

$86.08

$85.81

1.32%

-12.90%
(per barrel)











Heating oil (-HO)

$2.7733

$2.7618

2.34%

-4.83%
(per gallon)











Natural gas (-NG)

$2.8740

$2.8530

1.77%

-3.85%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.8062

$2.7689

6.63%

5.60%
(per gallon)











Brent crude 

$100.73

$100.23

3.00%

-6.19%
(per barrel)











Retail gasoline

$3.3840

$3.3830

0.92%

3.30%
(per gallon; AAA)












Marriott and Supervalu weigh on the markets
Meanwhile, shares of Marriott International (MAR) and supermarket operator Supervalu (SVU) were off sharply. Marriott, which warned of slowing growth in the Middle East and Asia,  was off $2.45 to $35.58.

Supervalu suspended its dividend and said it was conducting a review of its strategic options after earnings fell 45% from a year ago amid intense competition for grocery dollars.

Supervalu, operator of the Albertsons, Jewel-Osco and Shaw’s chains, saw its share price cut nearly in half, down $2.60 to $2.69. Supervalu also pushed down shares of Kroger (KR) and Safeway (SWY). Wal-Mart Stores (WMT), whose expansion into groceries is a big reason for the problems with supermarkets, finished up 5 cents to $72.31.

Boeing (BA) shares closed up 19 cents to $71.71. It announced a $14.7 billion order for more than 150 737 airliners from United Continental Holdings (UAL), which was off $1.01 to $23.78.

Twelve of the Dow stocks were higher, led by Merck and Procter & Gamble. Intel (INTC) and Microsoft (MSFT), the publisher of MSN Money, were the laggards, down 65 cents to $24.74 and 67 cents to $28.63, respectively.

Meanwhile, 139 S&P 500 stocks were higehr, led by Fastenal (FAST), up $2.50 to $42.31, and Merck. Fastenal, which makes fasteners, tools, safety equipment and related products, said earnings grew 18.8% to 38 cents a share. Revenue was up 14.7% to $804.9 million. Sales growth, however, tailed off in the quarter

Safeway, Lexmark International (LXK) and Marriott International were the laggards.

Fastenal was also the top Nasdaq-100 performer, followed by Netflix (NFLX) and O'Reilly Automotive (ORLY). Outsourcing contractor Infosys (INFY) and Sears Holdings (SHLD) were the laggards.

Wells Fargo settles discrimination case for $175 million
Wells Fargo shares were off 42 cents to $32.85. The nation's largest mortgage lender will pay at least $175 million to settle allegations that the company discriminated against black and Hispanic borrowers.

The settlement announced by the Justice Department today involves at least 34,000 minority borrowers who were charged higher fees or were steered by mortgage brokers into risky subprime mortgages when they could have qualified for a prime mortgage, ones offered to borrowers with the best credit.

Wells Fargo denied it had done anything illegal but settled to avoid litigation. It will stop working with mortgage brokers, however. Mortgages sold by brokers currently represent 5% of the Wells Fargo's home loan volume, according to the company. The company stopped all subprime home lending in 2008.

The Justice Department action was triggered by a 2009 examination by the Office of the Comptroller of the Currency, The Wall Street Journal noted. The investigation found that, after controlling for credit factors, that it appeared that minority borrowers in the Washington, D.C., metro area were more likely than white borrowers to be placed in subprime loans, according to the consent order.

Short hits from the markets -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.1000%

0.090%

25.00%

900.00%
5-year Treasury note 

0.627%

0.628%

-13.99%

-24.46%
10-year Treasury note

1.479%

1.498%

-10.85%

-20.95%
30-year Treasury bond

2.564%

2.589%

-7.20%

-11.25%
Currencies











U.S. Dollar Index

83.809

83.728

2.51%

4.08%
British pound

1.5442

1.5511

-1.67%

-0.62%
(in U.S. $)

 








U.S. $ in pounds

£0.648

£0.645

1.70%

0.62%
Euro in dollars

$1.22

$1.22

-3.27%

-5.76%
(in U.S. $)

 








U.S. $ in euros

€ 0.819

€ 0.817

3.38%

6.12%
U.S. $ in yen 

79.43

79.72

-0.40%

3.02%
U.S. $ in Chinese

6.40

6.37

0.36%

1.10%
yuan











Canada dollar

$0.983

$0.982

0.04%

0.18%
(in U.S. $)

 








U.S. dollar 

$1.018

$1.019

-0.03%

-0.18%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,565.30

$1,575.70

-2.42%

-0.10%
(per troy ounce)

 








Copper (-HG)

$3.415

$3.448

-2.33%

-0.61%
(per pound)

 








Silver (-SI)

$27.1610

$27.0230

-1.63%

-2.70%
(per troy ounce)

 








Wheat (-ZW)

$8.4675

$8.2625

11.82%

29.72%
(per bushel)

 








Corn (-ZC)

$7.3225

$7.040

15.36%

13.26%
(per bushel)

 








Cotton 

$0.6993

0.7102

-1.96%

-23.72%
(per pound)

 








Coffee

$1.8205

1.847

6.65%

-20.73%
(per pound)

 








Crude oil (-CL)

$86.08

$85.81

1.32%

-12.90%
(per barrel)










 

184Comments
Jul 12, 2012 1:02PM
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Dow back to 10k within 1 month. Worst case senerio. 6k.  If Obama wins we will see sales taxes at 18-21 % like they have just instituted this week in Spain. This along will cause inflation to jump 15 points then factor in a 200% increase in printed money supply last 3 years. One hell of a job ruining this country...... Down to the the bowels of HELL.
Jul 12, 2012 2:58PM
avatar

Lost on Earth

 

It is okay to disagree with a political party, but  threats are unnecessary....  

We live in America where it is still okay to agree to disagree. 

Jul 12, 2012 2:29PM
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Why does MSN allow the same person using different IDs to make multiple postings about dating services on the same site when his comments are totally unrelated to the theme of the discussion?  This keeps happening almost every day!
Jul 12, 2012 3:51PM
avatar
Livin" ,,,, tired of the BS in America.  We can do this and that and we do not do crap.  The Olympic garb is now being 'outsourced' to China. You bet, I am totally pissed at what has happened to our country. We are going to have a civil war on our hands.  I could give a dam. if the black helocopters or drones do this and that.  Tap my phone...do not care.  And, if you think that am alone in this thinking then think again.  We have a mess and it will take the guts we used to have to clean it up.  Tired of this .... wwe need leaders not fools. 
Jul 12, 2012 2:48PM
avatar
Kenya called....they don't want him back. 
Jul 12, 2012 1:18PM
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Uncle Ben continues to do all he can with our money to help his Wall Street crook buddies - No one calls him on it - repub or dem. Guess they are all in the tank with him.
Jul 12, 2012 4:19PM
avatar
As soon as all you party loyalists grow up and realize that the only difference between a donkey and an elephant is the sound they make and that they're all full of manure and dropping it on you, maybe then we'll get around to dumping them all out of their thievery roles and coming up with some real politicians who look out for the people and the country instead of their pockets at any cost.
Jul 12, 2012 2:55PM
avatar
Will the Euro-trash ever admit that socialism is one huge ponzi scheme?
Jul 12, 2012 2:37PM
avatar
Click on the word SPAM to send a report about these losers placing these "Life is so lonely" ads. Might not do any good, but it does collapse the stupid ad. Sooner or later, MSNBC will get tired of all these reports clogging up their system and boot these worthless morons. I click on SPAM EVERY SINGLE TIME.
Jul 12, 2012 2:41PM
avatar
"Buffett on Europe's 'Fundamentally Flawed System'

Europe is trying to put patches on something that leaks, says Warren Buffett, Berkshire Hathaway CEO, commenting on the EU's current fiscal problems, adding "the system cannot survive" the way it is currently designed."

And he backs Obama?

Jul 12, 2012 2:49PM
avatar
I going to find out who all these Lonley Posters are and they are going to be the first ones I feed to the europeans when they start getting hungry after they have run out of food....Can you image the Looting, Vandalism, piliging and plundering that is going to take place.....CAN YOU SAY GOOD BYE TO ALL THE US BRANCH RETAIL STORES IN SPAIN , PORTUGAL AND FRANCE and OTHERS. I did not include Greece because their is nothing there anyway....DO you see a TREND a round the world ?Every body has had it up their EYEBALLS with their ...F*** king Lying, Steeling  "LEADERS"........!!!!
Jul 12, 2012 2:53PM
avatar
Hussein Obummer has spent 3 out of every 7 days of his presidency campaigning for re-election. 
Jul 12, 2012 9:02PM
avatar

Unemployment over 8+%, economy in the dumper, Deficit at $14+ trillion and growing by over $4 billion per day, Housing mess getting worse since banks are selling foreclosures first which means that the value of your home will go down even further, the devaluation of the dollar for the first time in US history, the country is basically BKed .. can you say Greece and Spain??  And all this in one term from our clodpated Pres, Obama!! Imagine how bad things can get in 4 more years!! Can anyone tell me anything good that Obama has done for you and I and the middle class in the last 4 years??

 

In 2008, you voted for Obama because he was Black .... in 2012 you vote for Obama, it's just because you are stupid, uninformed or are one of the "entitled "peeps" that is living off the system. Shame on you either way!!

Jul 12, 2012 4:38PM
avatar
What we need is a President who is a leader rather than one who is a "campaign fund raiser".  The economy is in the dumps and the spaceman in Washington DC could care less-as long as he can line his pockets with money, the rest of us can go to hell.   Thank God, November is coming and real hope and change may come about!  ABO!!!
Jul 12, 2012 2:26PM
avatar
Bargain hunting.....? Man are they all in for a BIG surprise..! It is starting to snowball in the euro zone and it is going to get real ugly...I MEAN REALLY GET UGLY...! Spain will start to revolt soon. Greece Unemployment rate is getting worse and will soon lead into a civil unrest and around Europe Finland is think of leaving and it will be every country for it self...Now those people like to March and Strike and break stuff up.....Just Look at what happens when their favorite Soccer team losses..!!!! 
Jul 12, 2012 4:32PM
avatar
I'm tired of the bs too.  Just wish we could settle things more peacefully between the parties.. Unfortunately, we are are all stuck with each other.   I am getting tired of our personal freedoms slowing being taken away from us and agree that America needs to wake up...
Jul 12, 2012 6:20PM
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Don't worry the worst is yet to come. 16 trillion in  Fedral debt, state in local pension funds are broke, 10K peeps a day signing up for Social Security, 46 million on food stamp, 15% real unemployment rate, housing maket is a bust. And you are still gambling on the stock market, good luck with that.
Jul 12, 2012 2:05PM
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Clearly, the average individual investor doesn't stand a chance to make money by trading or investing in equities.  The markets are being manipulated by high-speed computer programs, hedge funds using arbitrage and derivatives, and huge institutional investors.  GREED is now woven into the very fabric of free enterprise!  It's a sad day for capitalism and our free market economy.

DON MOORE
Jul 12, 2012 12:48PM
avatar
If Peugeot cut 8000 jobs, that would be about 4000 more than I would have thought they employed. Can there be much left of them? It looks like the title of this summer may well be, "The Summer of our Miss-content". 
Jul 12, 2012 4:33PM
avatar
No, I'm not saying that they shouldn't sell to make a profit. What I am saying is that Wall Street and MSN gives all these reasons to support nothing more than profit taking!  They could use up a whole lot less space and time writing all this crap and summarize it by saying PROFIT TAKING TODAY!!!!
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