Eurozone debt fears slam US stocks
A German bond auction receives weak demand, escalating concerns about Europe. Bank of America and JPMorgan sink on stress-test plans. US consumer sentiment improves less than expected. Jobless claims increase.
Updated at 1:20 p.m. ET
U.S. stocks were falling Wednesday after a weak German bond auction stoked fears that Europe's debt crisis might hurt the continent's financial superpower.
The Dow Jones Industrial Average ($INDU) was down 163 points, or 1.4%, at 11,331. The index has fallen in four of the past five sessions, putting the benchmark in negative territory for 2011. All 30 Dow components were in negative territory, with Bank of America (BAC), Alcoa (AA) and JPMorgan Chase (JPM) leading the losses.
On Wednesday, the German government sold 3.5 billion of the 6 billion euros in 10-year bonds offered in an auction. German sovereign debt is considered one of the safest in the eurozone. Rising yields in Germany suggest investors fear Europe's debt crisis might affect the country, prompting investors to seek more return for their risk.
Post continues below.
The European Central Bank stepped in Wednesday to buy Italian and Spanish bonds to support the region's government debt market, but the move provided little relief amid concerns about Germany. Yields on Italian and Spanish bonds were also rising. London's FTSE slipped 1.3%. Germany's DAX gave up earlier gains, closing down 1.4%.
"There have been a lot of headlines about what could help Europe so investors are taking a believe-it-when-we-see-it attitude," said Brian Lazorishak, portfolio manager with Chase Investment Counsel. "The low-volume day may add to the volatility. It doesn't take much to move the market around."
The euro was plunging 1.18% to $1.34, a six-week low against the dollar. The greenback was up 1.1% compared to a basket of currencies. In the bond market, the price of a 10-year Treasury was falling by 3/32, pushing the yield to 1.93%.
Investors grappled with a slew of economic data one day before U.S. markets close for Thanksgiving. The Thomson Reuters/University of Michigan index of consumer sentiment rose to 64.1 in November from 60.9 in October. The reading was reduced from the previously reported 64.2 and less than the 64.5 economists had expected.
The Labor Department said the number of first-time claims for jobless benefits increased by 2,000 to 393,000 during the week ended Nov. 19, up from a revised 397,500. Economists had expected claims to have increased by 2,000 to 390,000 from the previously reported 388,000.
Orders for durable goods -- big ticket items that are typically bought occasionally -- fell 0.7%, better than the forecast for a 1.5% drop.
Personal incomes increased 0.4% in October, more than the 0.3% economists had projected. Spending rose 0.1% in October, less than the 0.3% economists had estimated and less than September's 0.7% pace, as consumers turned cautious.
"U.S. economic numbers continue to be consistent with slow growth at best," Lazorishak said. "Today's numbers were more or less as expected; not great, but not horrible."
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The January crude oil contract was slipping $1.93 at $96.08 a barrel. Gold for December delivery was down $10.10 to $1,687 an ounce.
Shares of Bank of America, Citigroup (C) and JPMorgan were dropping a day after the Federal Reserveannounced plans to administer "stress tests" to 31 U.S. banks with at least $50 billion. The tests will subject the banks to a scenario similar to what would happen if the U.S. economy "were to experience a deep recession while at the same time economic activity in other major economies were also to contract significantly," the Fed said. The six largest banks in the U.S. also will be asked to estimate "potential losses stemming from a hypothetical global market shock."
Farm equipment maker Deere (DE) said its fiscal-fourth-quarter profit rose 46% to $670 million, or $1.62 per share, beating analysts' expectations for $1.43. Revenue climbed 20% to $8.6 billion, topping forecasts for $7.9 billion.
Pandora (P) shares were down after the online music provider said it would likely lose more money than analysts expect in its fourth quarter, which ends in January. The company said it would lose 2 cents to 4 cents a share, compared with the 2-cent loss analysts projected.
TiVo (TIVO), which makes TV recording gear, posted a narrower-than-expected quarterly loss and delivered its first increase in total subscriptions in four years.
Diamond Foods (DMND) said audit committee member Joseph Silveira has died. The company's board has been conducting a probe of improper accounting for crop payments to walnut growers. CNBC's Herb Greenberg reported via Twitter that the death was a suicide. In a statement, the company said there was no connection between Silvera's death and the investigation. The company’s $1.5 billion acquisition of Pringles, which would triple its size, has already been delayed due to the board investigation.
I am sure that the report below is not one of the key economic reports they are talking about, but it seems to me that it should be. Maybe this is what we should be concentrating on rather than the condition of the European economy and why the rich can't get richer. It appears that
the poor are getting poorer though.
Nearly half of all Americans lack economic security, meaning they live above the federal poverty threshold but still do not have enough money to cover housing, food, healthcare and other basic expenses, according to a survey of government and industry data.
"Nearly half of our nation's families cannot cover the costs of basic expenses even when they do have a job. Under these conditions, cuts to unemployment insurance ... and other programs families are relying on right now would push them from crisis to catastrophe."
Let make the pay of Congress and the President and all those seeking these offices
$ 22,314 per year and see how fast things change.
Currently, the poverty threshold for the United States is an annual income of $22,314 for a family of four.
A little more than 15 percent of the country lives at or below that level, and the group wanted to look at the remainder, "many of whom live on the edge and are chronically at risk of financial crisis or falling into poverty."
A Happy Thanks giving to all!
Business is the lifeblood of our nation. Without it, there is no work, no money, nothing.
The problem that I see is that the majority of people, which includes our political leaders, really don't understand business. And they can't understand it because they haven't ever been in a position to run one.
For those that have never run or managed a business, it's like a childless adult proclaiming they know what it's like to be a parent.
Yet, we have a government filled with politicians, who overwhelmingly have never even worked in business, let alone run or managed one. And we have an electorate, the majority of which have worked in business, but never at a level where they have managed or run one.
It's very easy for someone who's never had kids dictate to a parent how to be a parent. Likewise it is for everyone out there that's never managed or run a business. And when you have this, you get what we got.
We need political leaders that understand the needs of business- not lawyers and career politicians.
Joe the Rag Man
You stated that: “Traders on Wall Street make money anytime stock changes hands, sell or buy.”
You got a serious case of the “ZACKLIES”; you are exactly right. The market is being manipulated by large brokerage houses and hedge fund managers the small investor is just a “patsy”.
Investors have to realize that billions are made by these same brokerage houses and hedge fund managers when the market goes down.
Our system is enabling people to go on aid because it is more beneficial to go on aid than to work for wages below $14 per hour.
I, and most everyone I think, realize that there are people who game the system, but there
are also many, probably a lot more, who try to find jobs and work to make a living. Unfortunately so many of jobs available today do not pay enough to put people over the poverty line and even with two people working in a family they do not make enough to live on.
Whose fault is this? IMO, it is the fault of both the public and private sectors. They do
not seem to be able to work together, or even amongst themselves, to help
correct the direction our economy and society is taking.
The creation of jobs that can support a family, even if two people have to work, is the
answer, IMO. That is what both sectors should be concentrating their efforts on. Profit,
greed, corruption, and power may have to set aside in both sectors if we are to turn
thing around in this country.
We must find a way for a combination of socialism and capitalism to work together for
the common good.
by free trade/job exporting our good paying manufacturing jobs the rich have effectively killed the middle class that buys their manufactured goods.the cheaper labor that has so enriched the wealthy isnt being paid enough to buy their products either.so of course manufacturing is going to decline.theres noone that can afford them but the rich and they dont need them
"Most people do not understand how the US poverty rate is measured" nor do they
they understand how the welfare system works, and that includes the ones who try
and administer it along with all the tax credits in incentives given to these people.
As with so many systems in this country, the tax system itself in particular, the welfare
system is so complex and decentralized that the left hand doesn't know what the right
hand is doing and which hand is giving out which benefits.
IMO, there are far to many needy people that may not be getting the benefits they need in this country and far to many benefits being given to those that may not need them. Sadly we
are not very good a determining which is which.
We need political leaders that understand the needs of business- not lawyers and career politiciansWe need Washington to be free of lobbyists, PACS, Superpacs and interfering millionaires and billionaires. If these people want to influence policy then run for office...
Things are not improving and all the good being found is small and trivial. When a 0.01% decrease in unemployment gets as much glamor as a 1% drop, that should be cause for alarm.
As for the "super" committee's failure: Really. Was that any real surprise?
Gary...I'm assuming included in the 45% figure are the 15% below the poverty level?
Those figures must have been attached to a family of a certain number(size)....Correct?
We draw SS for two(2) of us and it is just a little bit North of your poverty level.
We draw a "fair" amount for Soc.Sec......So people that draw much less have to be included in your 15% group....Singles,widows,lower life-incomes,etc.
I guess we are more fortunate then I thought, because I still thought the poverty level was in the neighborhood of $15-16,000.....And we have other small amounts of income, but NO DEBT.
Here's to hoping you have the opportunity tomorrow to get together with all of your kids, g-kids, and gg-kids and have a SUPER DAY!
Same for the rest of you too....
To short or not to short
That be the question.
Me thinks the bears rule
for another day of 401k carnage
The casino is open for business
step right up, folks
place your bets
place your bets, folks
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