Dow off 121 as post-election swoon continues

Investors worry about the economy, the fiscal cliff and Europe. Disney and Nordstrom earnings disappoint. Apple continues its slide since September. McDonald's monthly sales fall for the first time in 9 years. Gold and crude oil move higher.

By Charley Blaine Nov 8, 2012 2:23PM
Charley BlaineUpdated: 10:40 p.m. ET

Stocks finished at their lowest levels since the summer today as another slide in Apple (AAPL) shares pulled tech stocks lower and McDonald's (MCD) reported a surprising decline in October sales.

Apple was down $20.25 to $537.75, its seventh loss in the last 11 days, on worries that production problems are limiting iPhone 5 availability. There's talk investors are starting to ask what the company's next big wonder product might be. McDonald's was off $1.73 to $85.13 and was the biggest weight on the Dow Jones Industrial Average ($INDU), which fell for the second day in a row.

The major indexes all ended the day below their 200-day moving averages, which are key indicators of investor confidence.

After the close, shares of Walt Disney (DIS) were off 97 cents to $49.07. The company reported fiscal-fourth-quarter earnings of 68 cents a share, up from 59 cents a year ago and in line with Street estimates. Revenue of $10.78 billion, up from $10.43 billion, missed the Street estimate of $10.92 billion. Nordstrom (JWN) shares also were falling after hours as earnings of 71 cents a share missed the Street estimate of 72 cents.

The Dow closed down 121 points to 12,811, its lowest close since July 25. The Standard & Poor's 500 Index ($INX) was off 17 points to 1,378, its lowest close since Aug. 2. The close for the Nasdaq Composite Index ($COMPX) was 2,896, down 42 points, and its lowest close since July 23. The Nasdaq-100 Index ($NDX), heavily influenced by Apple, was down 40 points to 2,573.

Article continues below.
McDonald's said same-store sales fell 1.8% in October, as consumers flocked to rivals, including Burger King (BKW), which has been revamping its menus. The company said sales were down 2.2% in the U.S. and Europe. Sales fell 2.4% in its Asia Pacific, Middle East and Africa region. McDonald's contributed more than 13 points to the Dow's loss by itself. Half of the Dow's loss came from declines in McDonald's, United Technologies (UTX), Caterpillar (CAT), Home Depot (HD) and Chevron (CVX).

The Dow has fallen 434 points in two days. That's its worst two-day loss since the blue chips fell 573 points on Oct. 31-Nov. 1, 2011.

The euro's fall hurts U.S. stocks; oil and gold rise
The euro fell to a two-month low against the dollar after the European Central Bank held interest rates at a record low and said the eurozone economy showed little sign of recovering before year-end.

In addition, a European Union official said a decision on unlocking funds for Greece may not be made until late November. European stocks closed lower. A falling euro (or a rising dollar) makes U.S. exports less competitive.

Crude oil (-CL) in New York settled up 65 cents to $85.09 a  barrel today. Gold (-GC) settled up $12 to $1,724.20 an ounce.

The 10-year Treasury yield was 1.632%, unchanged from Wednesday.

Energy prices -- New York close



Thur.     Wed.

Month chg.

YTD chg.
Crude oil (-CL)

$85.09

$84.44

-1.33%

-13.90%
(per barrel)











Heating oil (-HO)

$2.9554

$2.9621

-3.49%

1.41%
(per gallon)











Natural gas (-NG)

$3.6080

$3.5780

-2.28%

20.71%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.6073

$2.5889

-0.87%

-1.89%
(per gallon)











Brent crude 

$107.25

$106.82

1.49%

-0.12%
(per barrel)











Retail gasoline

$3.4640

$3.4620

-1.62%

5.74%
(per gallon; AAA)












A nervous market
Investors were probably a little punchy after stocks suffered their worst one-day losses in nearly a year with the Dow's 313-point drop on Wednesday. 

The sell-off was due in part to President Obama's re-election and the uncertainty because of the so-called "fiscal cliff" -- the combination of tax hikes and spending cuts that will kick in starting Jan. 1 unless Congress and the White House can agree on changes.

The fiscal cliff would drive the U.S. economy back into recession next year and result in a jump in the jobless rate to 9.1% by the end of 2013, a new report from the Congressional Budget Office said.

The CBO,  the independent budget arm of Congress, said economic output would drop by 0.5% in 2013 without action. But the CBO added the U.S. economy would in the longer run return to better growth rates and lower employment, with the U.S. unemployment dropping perhaps to 5.5% by 2020, The Wall Street Journal noted.

In addition, worries are deepening about economic woes in Europe. Germany's economy is starting to slow down, and political tensions were high in Greece after its parliament agreed to new austerity measures.

The Dow and S&P 500 are off roughly 6% since a market peak in mid-September. The Nasdaq has fallen 9.1% since Sept. 14, when it closed at a 2012 high of 3,184.

If the fiscal cliff takes effect, it will result in an increase in tax rates on dividends.

Because of that potential, Leggett & Platt (LEG), which makes components used in bedding and furniture, accelerated the payment of its fourth-quarter dividend of 29 cents a share to Dec. 10 to qualify for 2012 tax rates. Leggett & Platt was down 17 cents to $26.84.

Lastly, the third-quarter earnings season has produced profits that have met estimates for the most part. Revenues for S&P 500 companies are beating estimates less than 40% of the time, instead of the usual 62%. Part of that is due to slowing non-U.S. business and the dollar's depressing effect on international revenue. If the dollar rises, the value of non-U.S. revenue falls.

The Apple effect on markets
The peaks for the major averages appear to  tracking with Apple's tumble from an all-time closing high of $702.10 on Sept. 19 and a record intraday high of $705.07 on Sept. 21.

The reason to concentrate on Apple is that it is the world's most valuable company, and it has shed about $143 billion in market capitalization as the stock has slid more than 22% since those September highs. Apple represents about 17% of the market capitalization of the Nasdaq-100 and 4% of the S&P 500.

There are lots of reasons why Apple has fallen so much. The stock was up 73% for the year at its peak. By a number of measures, the shares were overbought, and it's vulnerable to violent moves because it is the largest holding of many of the biggest hedge funds. If they start to sell, bad things can happen quickly.

It is possible that Apple is nearing a bottom. Its 14-day relative strength index was below 22 today. The index measures a stock's momentum. A reading below 30 implies a stock is oversold. A reading above 70 suggests a stock is overbought and nearing a pullback.

Another broad slump
Only four of the 30 Dow stocks were higher today: Bank of America (BAC), Boeing (BA), Hewlett-Packard (HPQ) and Travelers Companies (TRV). The laggards were Cisco Systems (CSCO) and McDonald's.

In addition, only 146 S&P 500 stocks were higher, along with 194 Nasdaq-100 stocks.

Chipmaker Qualcomm (QCOM, Century Link (CTL) and Verisign (VRSN) were the S&P 500 leaders. Qualcomm's fiscal-fourth-quarter earnings beat Street estimates, thanks to an explosion in demand for smartphones. It boosted its first-quarter guidance.

Verisign and Qualcomm were also the top Nasdaq-100 stocks. Whole Foods Market (WFM) and SanDisk (SNDK) were the laggards.

Whole Foods, down $5.62 to $90.31, offered lower-than-expected guidance for the fiscal first quarter. Results will be hurt by disruptions to its operations in the Northeast by Superstorm Sandy.

Short hits from the markets -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0900%

0.100%

-18.18%

800.00%
5-year Treasury note 

0.643%

0.662%

-10.07%

-22.53%
10-year Treasury note

1.632%

1.632%

-3.20%

-12.77%
30-year Treasury bond

2.769%

2.821%

-2.88%

-4.15%
Currencies











U.S. Dollar Index

80.886

80.867

1.12%

0.45%
British pound

1.5990

1.5990

-0.91%

2.91%
(in U.S. $)

 








U.S. $ in pounds

£0.625

£0.625

0.92%

-2.83%
Euro in dollars

$1.28

$1.28

-1.63%

-1.59%
(in U.S. $)

 








U.S. $ in euros

€ 0.784

€ 0.783

1.66%

1.62%
U.S. $ in yen 

79.41

79.95

-0.49%

2.99%
U.S. $ in Chinese

6.26

6.24

0.48%

-0.98%
yuan











Canada dollar

$1.000

$1.004

-0.02%

1.95%
(in U.S. $)

 








U.S. dollar 

$1.000

$0.996

0.02%

-1.98%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,726.00

$1,714.000

0.40%

10.16%
(per troy ounce)

 








Copper (-HG)

$3.470

$3.442

-1.36%

0.97%
(per pound)

 








Silver (-SI)

$32.2400

$31.661

-0.24%

15.49%
(per troy ounce)

 








Wheat (-ZW)

$9.0250

$8.940

4.40%

38.26%
(per bushel)

 








Corn (-ZC)

$7.4125

$7.443

-1.92%

14.66%
(per bushel)

 








Cotton 

$0.6926

$0.698

-1.16%

-24.45%
(per pound)

 








Coffee

$1.5140

$1.512

-2.10%

-34.07%
(per pound)

 








Crude oil (-CL)

$85.09

$84.440

-1.33%

-13.90%
(per barrel)










 

759Comments
Nov 8, 2012 8:02PM
avatar
Gas rationing expanding in the hurricane zone. Glad to see Obumfuk is ALL OVER the relief effort!

Obama; "Hey Chris, thanks for the photo op, but you're of no further use to me!
i.e. You're screwed!"

Nov 8, 2012 8:02PM
avatar
Fat Cats are pulling their money out of the stocks so they can move it to the BAHAMAS with Mitt and the gang. Boner must have had a melt down crying all the way to the bank with useless friends. We will survive this. Pull up your pants the spanking is over.
Nov 8, 2012 7:56PM
avatar

"AND GET YOUR ARMS AROUND THE ACTUAL AMOUNT OF MONEY

13 SEAWOLF CLASS SUBMARINES PER MONTH"

How about  THE TOTAL DAMAGE FROM SANDY, IN ONE MONTH!!!!!!!!!!!!!
Nov 8, 2012 7:54PM
avatar

1 Crabby Lady, you have to be a wee bit more positive. it's totally normal after menopause for depression to set in because your reason for existing, i.e. "eggs or ovi," no longer exist and your cells begin rapidly aging and dying off. Seek medical treatment for this condition which is a normal part of the aging process for old alley cats who can't reach the top of the roof or the fence anymore.

 

God bless Boehner for partnering up with Obama on the budget crisis and Obamacare. Great day!!!!!!

Nov 8, 2012 7:49PM
avatar
Apple shareholders have lost  $705.07 - 537.75 = 167.32 x 940.69m = $157,396,250,800 in only 48 days.  Ouch!!!!
Nov 8, 2012 7:47PM
avatar
VF,
they're already posturing to blame the economy all on Europe this time around.

How the heII can you obstruct something that doesn't exist (Obama's Budget Proposal)???

Nov 8, 2012 7:47PM
avatar
If you want to know why things happen follow the money. Some where out there, there is a major corruption in this election and our government.
Nov 8, 2012 7:46PM
avatar
Classic:  How exactly are we being "fleeced" out of 40 billion?
Nov 8, 2012 7:45PM
avatar
MITCH MCCONNELL  NEEDS TO BE FIRED NOW AND RETIRED IN 2014..
Nov 8, 2012 7:45PM
avatar

It's amazing how they held this off until after the election.  I guess they were hoping the guy would win that would bail them out with our children's futures.

Nov 8, 2012 7:45PM
avatar
Koo:  Obamacare isn't even socialized medicine.  It's manditory (ok, not even manditory) participation in a regulated insurance market.
Nov 8, 2012 7:44PM
avatar

Kyte:  Can't campaign against it anymore.  Fighting it just increasing the "uncertainty" they keep saying is holding back business,

 

I wonder if they'll say "Our decision to stop being obstructionist douce bags helped the economy."

Nov 8, 2012 7:42PM
avatar

Once again, the GOP's Boehner during a Diane Sawyer interview within the last hour just said that "Obamacare is now the law of the land and we will not be fighting this anymore."

 

I am absolutely positive that the budget crisis will be resolved very quickly now between the GOP and Democrats, especially since Obama has already presented them a budget. This is fantastic news for all of us. Look for a huge Christmas rally. Be positive. Move Forward. Believe in our President.

 

Praise God our hard-working Americans will soon have socialized medicine and more money to spend on their families.

Nov 8, 2012 7:42PM
avatar
So the Dems finally got what they wanted. A hidden hugh tax increase on the middle class through Obamacare. Of course since most of you ,like Congress, didn't read it to start with you aren't aware of what's in there so enjoy your gruel come 2014, it will be all you can afford,courtesy of your representatives taking care of you. They've taken care of you alright.
Nov 8, 2012 7:40PM
avatar
KOOk said;
"HATER!!!! Your boy Boehner of the Good Ol' GOP just announced that Obamacare is now the law of the land and the GOP will not be fighting Obamacare anymore. Socialized Medicine is now LEGAL !!!!!"

That's because they know it will implode itself.

Nov 8, 2012 7:38PM
avatar
No investors woke up the last few days and said (Boy i am worried about the economy) i think i will sell my stocks. You have to remmber that most of the people voted for Obama so they should be happy.   Wall Street is pulling this not the investor!!!
Nov 8, 2012 7:37PM
avatar
        Most of these posts are straight out of Bizzaroworld.                                
Nov 8, 2012 7:35PM
avatar
Obama must have massaged Boehner a bit to get him to come around! hehe
Nov 8, 2012 7:34PM
avatar
Why do the losses of the last 2 days seem so contrived to me? Don't tell me that on Monday and Tuesday all the brains on Wall Street thought that Mit would win. If so, they were the ones drinking the Kool-aid. Why do I think that many of the big institutional (i.e. Republican) folks decided to take some profits and tank the market for the rest of us? I think that their message is "You rotten Americans didn't vote our way after we sent all that money to Karl Rove in order to buy the election and now you will be punished". Thank goodness that Massachusetts elected Elizabeth Warren. Maybe she'll take a look at all the illegal and irrational crap that is happening on Wall Street and send these clowns to jail.
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