Dow off 77 as stocks struggle on weak retail sales

Retail sales were soft in May and softer in April. A ratings agency cuts Spain's debt rating to junk. Oil slips but gold moves higher. European stocks drop. Dell gains on its dividend announcement.

By Charley Blaine Jun 13, 2012 12:22PM
Charley BlaineUpdated: 5:19 p.m. ET

Stocks slumped today as bad news piled onto bad news. The Dow Jones industrials ($INDU) fell as many as 120 points at 3:45 p.m. ET before late buying trimmed the loss to 77 points.

There was the government's disappointing report on May retail sales. Worries grew about the financial risks from Sunday's parliamentary election in Greece. Greek depositors were pulling their money out of banks in case the election resulted in junking the euro as their currency. Credit Agricole (CRARY), one of France's largest banks, was reportedly making plans to sell -- or simply abandon -- its Greek subsidiary.

Then, ratings agency Egan-Jones cut its rating on Spanish debt from "B" to "CCC+," which is junk status. And mining giant BHP Billiton (BHP) cut its outlook for commodities prices over the next three to five years. The Financial Times called the report a sign that natural-resources companies "are braced for a lasting impact from the global financial crisis."

The one offset: JPMorgan Chase (JPM) CEO Jamie Dimon wowed investors -- if not critics -- in his defense of the banking giant in the aftermath of a huge trading loss in one its divisions. JPMorgan shares were up 53 cents to $34.40.

The Dow closed down 77 points to 12,496, a day after the blue chips gained 163 points and two days after falling 143 points. The Standard & Poor's 500 Index ($INX) was off 9 points to 1,315, and the Nasdaq Composite Index ($COMPX) was down 24 points to 2,819.

Article continues below.
The Nasdaq-100 Index ($NDX) was off 19 points to 2,527. Apple (AAPL), the biggest influence on the index, was off $4 to $572.16 after reaching as high as $578.48. Dell (DELL) was up 30 cents to $12.28 after announcing it will start paying a quarterly dividend, probably 8 cents a share, in its fiscal third quarter. The shares reached as high as $12.59.

The market's pullback showed one more time how events outside the United States can affect domestic markets. The worries about the Greek election are building. Reuters reported that Greek's largest banks are seeing deposit outflows of $625 million to $1 billion a day because of fears that a Socialist government might return Greece to its old currency, the drachma.

Plus, there was the downgrade of Spanish debt by Egan-Jones. Italy's auction of 6.5 billion euros in 1-year bonds produced yields of 3.972%, up from 2.34% in May.

American Express (AXP) shares fell $1.38 to $55.10. Vice Chairman Edward Gilligan said at a conference in New York today that second-quarter billing growth through May was 9% to 10%, slower than in the first quarter.

A rising dollar against the euro in April and May was a big reason for the slowdown. The euro is up 1.7% against the dollar this month.

The government will report on initial jobless claims and consumer price inflation on Thursday. Futures trading suggests a soft open.

Utilities -- a safe haven for many -- lead the market
As the market slumped, utility stocks, prized for their dividends, emerged as the strongest sector. Nine of 10 sectors of the S&P 500 fell back on the day.

Financial stocks were fairly strong for most of the day, thanks in part to Dimon's testimony and question-and-answer session with the Senate Banking Committee today. Wells Fargo (WFC) was up 28 cents to $31.58. SunTrust Banks (STI) gained 32 cents to $22. But regional banks were lower, including Cullen/Frost Bankers (CFR), Huntington Bancshares (HBAN) and Zions Bancorp (ZION).

Retail stocks were slammed. Macy's (M), down  $1.66 to $35.06, was the third-worst S&P 500 performer. Nike (NKE) and Urban Outfitters (URBN) were the fourth- and fifth-worst S&P performers. Also lower were housing stocks.

Crude oil moves lower; gold and copper move up
Crude oil (-CL) in New York settled down 70 cents to $82.62 a barrel. Brent crude in London was off 35 cents to $96.90 a barrel.

The retail price of regular unleaded gasoline fell to $3.539 a gallon from Tuesday's $3.542, according to AAA's Daily Fuel Gauge Report.

(-GC) settled up $5.60 to $1,619.40 an ounce. Silver (-SI) was off slightly at $28.941 an ounce, while copper (-HG) rose slightly to $3.3395 a pound.

The dollar was lower against the euro and other major currencies. Interest rates fell. The 10-year Treasury yield was 1.599%, down from 1.661% on Tuesday.

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JPMorgan's Dimon concedes mistakes
JPMorgan Chase shares moved higher as CEO Jamie Dimon jousted with the Senate Banking Committee over the company's $2 billion-plus trading loss in a portfolio that was supposed to act as a hedge against big systemic events like the 2008-09 financial crisis or the eurozone crisis today.

Dimon did concede that a new risk model -- which was designed to help test the volatility of trading vehicles -- allowed too much risk and contributed to the loss, but, he reminded the committee, there were no depositor losses or losses to be borne by taxpayers.

In addition, Dimon admitted that the company provided inaccurate information about the size of the trade to regulators, arguing he didn't have good information, either.

He also said  the company may demand that responsible executives may be forced to give back some or part of their bonuses once a final review of the problem is finished.

Shareholders have taken a hit. JPMorgan shares fell nearly 24% between May 10, the day Dimon announced the loss, and June 4, when they closed at $31. They're still off 15%.

The loss occurred in the company's Chief Investment Office in London. The company has changed management and fired a number of executives as a result.

This, however, was a hearing where Dimon emerged the clear winner. Republicans used the hearing to ask what regulations should be repealed or changed. Dimon said he preferred strong, simple regulation. Democrats worried the bank was too big.

Johnson & Johnson gains on upgrades
Johnson & Johnson (JNJ) gained $1.37 to $64.45. The health care company and Dow component said it received regulatory clearance to close its $19.7 billion bid for medical-device maker Synthes.

Analysts from J.P. Morgan, Jefferies & Co. and Raymond James Financial upgraded the stock to "buy," or equivalent ratings.

Facebook (FB) was off 13 cents to $27.27. The stock had been as high as $28.10. It rose 39 cents to $27.40 on Tuesday.

Seven of the 30 Dow stocks were higher today, led by Johnson & Johnson and JPMorgan Chase. Three were unchanged: Coca-Cola (KO), Pfizer (PFE) and AT&T (T).

The Dow laggard was American Express, followed by Home Depot (HD), off $1.27 to $50.97. The stock is off 3.6% from its 52-week high of $52.88, reached on May 3.

About 88 S&P 500 stocks were higher, led by Dell, Southwest Airlines (LUV) and Johnson & Johnson. First Solar (FSLR), WPX Energy (PPX) and Macy's were the laggards.

Dell, Seagate Technology (STX) and Green Mountain Coffee Roasters (GMCR) were the leaders of the Nasdaq-100, with Virgin Media (VMED) and Expedia (EXPE) the laggards.

Short hits from the markets -- New York close



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Jun 13, 2012 1:25PM

Someone below wrote

 "JP Morgan apologized today, how about the Senate apologize for all the insdie trading over the years".


Now that's the smartest thing I've heard all Day......great post.

Jun 13, 2012 12:54PM

I have to wear a diaper when watching the stock market because it gives me the ****.

Jun 13, 2012 12:56PM
I'd like to say to the Europeans......hea get your s_it together.....Than I looked at our Debt.....oops.
Jun 13, 2012 1:53PM
Sadly to say that Obama need to say the economy rest on his shoulders instead of blameing G. Bush. He "Obama" has 3.5 years in office and he continues to blame other for his failures.  He is no H. Truman!
Jun 13, 2012 2:11PM

Quoted text:

Stocks were drifting today on investor disappointment with the Commerce Department's May retail sales report as well as continuing worries about financial conditions in Europe


It doesn't take a genius to figure out not only the USA but most of the world's economies are struggling.  But rest easy....our nitwits...(I mean our Government) thinks everything is good.  It must be great to live in their world with nice high paying jobs, great benefits & pensions.

Jun 13, 2012 1:11PM

Stock market. What a game. Here it sit's at the one of the highest points in history and it is struggling. When will folks realize it's all just a game???

It could shoot to 20,000, drop 100 points and the world is over.

THey said JP Morgan apologized today, how about the Senate apologize for all the insdie trading over the years. I lost a million dollars in the stock market, wish I would have had inside info. like our senators. Noone their to protect me...




We are seeing Europe fall apart in front of our eyes.



European tensions were building -- and stocks fell back -- as investors look toward Sunday's elections in Greece and worry about Spain and Italy. Italy's auction of 6.5 billion euros in 1-year bonds produced yields of 3.972%, up from 2.34% in May. Meanwhile, Reuters reported that Greek's largest banks are seeing deposit outflows of $625 million to $1 billion a day.



Pretty much this is the end of the western ecnomic system folks.


Jun 13, 2012 2:07PM

Don't you just love that Charlie Blaine STILL choses to feature Europe's economic woes, as "the reason for" the stocksnot doing so well today, INSPITE OF THE REPORT YESTERDAY BY THE FEDERAL RESERVE, SHOWING THAT FROM 2007 THROUGH 2010, NET WORTH AMONG AMERICAN FAMILIES HAD DROPPED.


Among the items they showed, a reduction in savings, a loss of wages, AND as would be no surprise a loss of value in their houses (which is no surprise considering the housing market crash.  And yet some of these pundits would love us to believe the US eonnomy is fine, with not a dark cloud on the herizon, and all the skittish feelings on the part o investors has to be Greece and Europe.  And this ony the day after the Federal Reserve released that report concerning the economic matters, right here at home, in the US of A....  Umm yeah Blaine, OK, but some of us have more concern about the US economy from reports like that from the Fed, then we would from Europe's situation being circled around the media for like a year now....  Especially consideing a certain lack of "the light at the end of the tunnel" wrt expecting salaries in this country to be on enough of an upsing to excede the inflationary rate, let along allow for the sort of spending power people had in 2007, let along 1999....

Jun 13, 2012 2:50PM

I have failed to see the sucess in the promises that Obamaa has made@

Jun 13, 2012 4:49PM
the hell u say??? nobody's buyin' stuff??!! how can this be!!! the private sector is doing well! the economy is doing well! more and more stimulus money so we can do even better!! oh wait, we tried that 2wice already and the country's growth is where it should be under a marxist bastards regime, in the toilet! u gotta luv these dopey headlines, 'weak retail sales' OF COURSE RETAIL SALES ARE DOWN U MORONS! PEOPLE ARE OUTTA WORK IN STELLAR NUMBERS!! WHAT ELSE DID U EXPECT TO HAPPEN U MARXIST MEDIA IDIOTS!!
Jun 13, 2012 3:14PM

Bush inherited the bust and 9/11 from the failed Clinton Regime. Because of Clinton's foreign policy weakness, the bad guys waged an uncontested war against us. Bush kept unemployment at or below 5% his entire term (despite those headwinds). Obama has had 40+ months of unemployment above 8%, The DNC took over congress in Jan 2007, and have been driving this country further and further into debt. With Obama, unemployment is up, welfare is up, food-stamp recipients are up, the deficit is up, taxes and government interference is up, minority unemployment is up, racial, gender and class warfare sentiments are up... With Obama, home ownership is down, personal freedom, wealth and independence are down, upward job mobility is down, confidence in the future is down... In short, everything that is UP should be DOWN, and everything that is DOWN should be UP -- nice job potus. 

Jun 13, 2012 1:15PM
If you read the blog-out on Dimon's holiday with Congress, you'll note that no Republicans asked any significant questions. He claimed to be over-regulated but the $2 billion lost wasn't in the Dodd Frank Act arena. Sadly, no one was bright enough to ask-- "we are in major trouble, what would you do to mitigate risk right now?" Big Finance is in every arena except one right now: job recovery for displaced workers. The more of them restored to former jobs and income, the more cash flow to offset the volatility. Even a Jamie Dimon knows that. Honestly, I think he's clueless right now and the whole scam is getting to him. Congress was unable to achieve resolution. 
Jun 13, 2012 7:34PM
So ... weak retail sales would indicate that a lot of these retailers will be laying people off?? And the unemployment will continue to go up and the economy will continue to go down. So, Barry ... now what?? What brilliant plans do you have to revive the economy, put people back to work, stop the growing inflation, stop the growing debt that will put this country in the same position as Greece and Spain shortly. Get the faith of the people in this country as well as those in other countries back behind the U.S. What great plans do you have?? No more talk shows, no more comedy routines, no more hanging with the LA heroin crowd. Time to put up or shut up. Time for BS is over and the clock is ticking for you. Five months and counting!! You are toast!!
Jun 13, 2012 5:11PM
How can you buy American when American manufactures do not make it america they buy chinese parts and assemble it here or remarket it OEM and just packaged with their name. I just bought an American Standard Toilet and the inside of the Tank was stamped Made in China...we are all sellouts and or ponds to the big corporations that fool us but we all share the blame.....The middle class status has moved to China...30 years ago I remember seeing huge Chinese squares and Streets filled with bicycles only 5 or 6 cars in the picture if that...Now they have so many cars they have smog alerts everyday worse that L.A.. in many Chinese cities. Today we have the clown cars FIAT, Chevy, Smart...etc. with 4 cylinders 1500cc  lawnmower engines etc...on our highways and debt up to our eyeballs and getting worse.....unemployment is really at 16.7 when you add all 47 million that are on food stamps because all assistance programs have quit.(oh I forgot they have left the search and are no longer counted)Our hole is getting deeper by the day and we are not getting out. Wait until the Tax programs end at the end of the year and watch inflation end it all.
Jun 13, 2012 4:25PM
I love these discussions about "stimulus" and "Tarp".  I asked my class one day if thier parents were happy when they got their stimulus check.  I then asked them to ask their parents how much more they were now spending for groceries, clothes, etc.  That $600 doesn't look all that wonderful now.
Jun 13, 2012 3:50PM
In the latter part of 2008 I worked for Wells Fargo as a part time teller. Many depositors were coming in the bank to withdraw all their deposits. They were afraid the banks were going under and they would lose their money. They were running around like chickens with no head. In most cases we could not convince them to leave the money in the bank because of the depositors insurance would cover their money. Many of us wondered where did these people keep their twenty, thirty, fifty or more thousand dollars in cash. They did not understand if the banks AND the United States went bankrupt, their money would have no value. As countries began to use paper money instead of gold and silver coinage to represent money, the printing presses have rolled on and on. In our society we go more and more paperless except in the printing of money. What backs up the paper is up to you to decide. Is it gold and silver? Not really my dear, it is the good faith of the strength of a country's gnp that makes the paper worth anything. We get paid by check (paper) or direct deposit electronically. We spend the cash (paper) or debit or credit card (plastic). We pay our bills with a check (paper) or bank bill pay electronically or with a credit or debit card (Plastic). OMG money is but a figment of our imaginations, yet if we don't have a lot of this paper we can't purchase anything or pay for it. Crazy isn't it.
Jun 13, 2012 5:16PM

>>>. I just bought an American Standard Toilet and the inside of the Tank was stamped Made in China...<<<


Are you saying that the Chineese make crap products?

Jun 13, 2012 3:26PM
The next election is about the future: with obama, you get more government, more taxes, more regulation, more welfare, more deficit spending, and more corruption. I prefer less government and lower taxes to more. I prefer less regulation, welfare and deficit spending, and of course, less corruption. The government is a horrible steward of our money, and the less of they receive, the better it is for all of us.
Jun 13, 2012 7:14PM
longbeach said:
"Given the two choices they have to date that would also be the Democratic party."   
Only if the value you want to promote is "the plantation model" and dependency.   Dem candidates  are more than willing to throw minorities a few bones, in exhange for their votes. 
Why you can't see this is baffling.  Even some very successful and educated black professors have written about this. 
A party makes you think that "it is for you" based on "your race."   That in and of itself is a racist attitude.  A politician should not be for you or against you based on your skin color.
Once, the politician or party gains your trust (and vote), they will continually tell you what they think you want to hear, to contiune getting your vote.
Newsflash - these politicians don't really care about you.  They just want your vote and they'll promise whatever handout they think will get it.   
Jun 13, 2012 2:00PM
Patriot: I agree -- when repubs take over the WH and Senate, we will own the economy on day one. We will not spend 3 years complaining that Obama and the DNC did it to us. We will simply go about the business of returning Americans to prosperity. November cannot get here fast enough.
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