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.

By TheStreet Staff Nov 23, 2011 8:36AM

TheStreetImage: Wall Street sign (© Corbis/SuperStock)By Chao Deng

 

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.

 

The S&P 500 ($INX) was down 18 points, or 1.5%, at 1,170. The Nasdaq ($COMPX) was falling by 42 points, or 1.7%, at 2,479.

 

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.

 

Boston Scientific (BSX) received approval from U.S. regulators for its Promus Element Plus cardiac stent, which is expected to hit the U.S. market immediately and Japan in mid-2012, adding $200 million to the company's gross profit after 2012. Shares of Boston Scientific have been trading near a 52-week low.

 

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.

 


221Comments
Nov 23, 2011 9:11AM
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Stock futures slip before key economic reports
 

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.

 
45 percent in US struggle to make ends meet  'This is a wake-up call for Congress, for our state policy-makers, really for all of us I think this pretty well says it all about the state of our economy and society as a whole.

 

 

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."

Nov 23, 2011 9:43AM
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Happy Thanksgiving everyone!  And Merry Christmas also.

For those individuals who share their love with family and friends these holidays will always hold their precious values.

But financially many people will not be having such a good time.  It really pisses me off that one of the biggest reasons the market has been down this week is due to our inept congress. I watched a Norquist pledge signer from 1994 mention that even though he signed for no new taxes 18 years ago, he is still being held to that pledge.  By today's standards - it takes $15,278.07 to buy what $10,000 bought then. (CPI Inflation calculator)

The bible states that man cannot serve two masters.  Politicians pledge to serve the public, but then they pledge to serve party lines, lobbyist, themselves, and any and everything that will keep them in office.

This country is being governed by individuals who believe that some things are written in stone and some are not, and they get to decide what is what.  Some traditional values do change with the times, but some - like truthfulness, honesty and integrity do not.
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Most people do not understand how the US poverty rate is measured and assume the $22,314 is all a family of 4 receives. Things that are not included are over $6,000 Earned Income Tax Credit and additional child tax credit received as a tax refund. Free school lunches and breakfast for the 2 kids ($1,000), $400 per month food stamps, Medicaid ($700 per month or more if purchasing health insurance) free cell phone with 250 minutes per month, subsidized housing and utilities and the list goes on. 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. Check current data to see how many people living below the poverty level have cable TV, 2 or more vehicles, air conditioned homes and even how many own their home. It is time our government reevaluate what is the true poverty level and count all aid received. Of course our leaders are not interested in changing the rules because the current system buys votes at the expense of those who want and are trying to get a head.
Nov 23, 2011 10:11AM
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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.

Nov 23, 2011 1:14PM
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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.

Nov 23, 2011 1:06PM
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The excuse is back to Europe again.  Next will be Greece again and then back to our debt.  People, we are being milk of our savings and 401s.  If we can move our money to protect it, we should.  We have a dishonest Wall Street and no good Politicians.  It is pure greed.
Nov 23, 2011 10:50AM
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HAPPY THANKSGIVING TO JON CORZINE MF GLOBAL !   FROM ALL THE SMALL INVESTORS WHO'S LIVES HE HAS RUINED THIS HOLIDAY SEASON !!   ENJOY YOUR TURKEY LEG JON !  JUST MAKE SURE YOU DON'T CHOKE ON IT !  2 BILLION AND COUNTING MISSING ???
Nov 23, 2011 10:44AM
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Everyone who knows anything about financial markets know that a huge correction is coming. All countries including and mostly the US is in way too much debt and the system needs to correct the funny money scheme, printing money like there is no tomorrow. Ignorance and arrogance together is a bad combination the leaders have shown both. The greed by the top will bring them down just as fast as they took out the middle class. Everyone will be affected in one way or another. I just wish corporate welfare queens realized just how ignorant the greed is on their part and how it will affect them just as much as the common family. On that note all will come out in the end, Happy Thanksgiving to everyone..
Nov 23, 2011 10:08AM
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Someone,

 

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.

 

 

 

Nov 23, 2011 10:11AM
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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

Nov 23, 2011 10:21AM
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someone,

 

"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.

Nov 23, 2011 12:06PM
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We need political leaders that understand the needs of business- not lawyers and career politicians
We 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...
Nov 23, 2011 12:00PM
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Lower consumer sentiment, gee what a shocker.  New claims for unemployment up, gee what a shocker.  Super commitee fails, gee what a shocker.  And yet there is still a very large majority of people in this country who think the present administration has done a wonderful job.  Not a shocker.  Everytime I see a Subaru with a "YES WE DID IT" Obama sticker, I am looking for the tag line "SCREWED UP AMERICA FOR THE FUTURE GENERATIONS" 
Nov 23, 2011 9:29AM
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When all you worry about is all the things you have and worship and never want to relinquish then it's easy to overlook and ignore all the ills and injustices of the world. Have a slice of humble pie on Thanksgiving!
Nov 23, 2011 12:21PM
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No matter what experts call it: We are heading towards a global depression, not a recession.

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?

Nov 23, 2011 10:11AM
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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)....Corr​ect?

 

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,wid​ows,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.

Nov 23, 2011 10:20AM
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If you are counting on our government or Wall street to do the right thing, forget it.  Be grateful that you have been taught the basics in life and move on. I struggled for many years to get my education and learned two different trades. I looked at what jobs were still around during the great depression #1.  I applied at a class 1 rail road and got a job back in "03" If the rail roads stop running the country will be truly over with. Have not been laid off yet any how.  We had our golden times here already. Just had no idea of it when they were going on. Just glad I have no children to suffer what's coming our way. " Happy Thanksgiving to all"
Nov 23, 2011 9:14AM
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POPS,

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....

Happy Thanksgiving!!!

Nov 23, 2011 1:22PM
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Well, golly, geez......those Europeans (according to the writers of this article) are at it again......I have said it before......We are not the morons or idiots these folks on Wall Street believe us to be.....Most of us know that stock markets are manipulated by very few people (included Europe's).....If we want to place blame on this horrible economy, let's all take a good look in the mirror.....we elected these people and it really is up to us to repair the damage......not to worry though; the "Select Super Committee" is cutting our debt (just like they promised and just like we knew they wouldn't) as we speak here!  God bless America.  We are in more trouble than can be imagined.  (and I am far from being a Doomsdayer)
Nov 23, 2011 9:36AM
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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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