Amazon earnings disappoint; Dow off 207

The online retailer's shares slump after third-quarter earnings miss Street estimates. Stocks fall on earnings and economic worries. Netflix shares drop nearly 35%. Gold hits $1,700 on new European uncertainty.

By Charley Blaine Oct 25, 2011 12:56PM
Charley BlaineUpdated: 8:25 p.m. ET

The big stock market rally abruptly stalled after three days of gains as consumer confidence fell in September and outlooks from 3M (MMM) and United Parcel Service (UPS) suggested the economy is hardly growing.

To make matter worse, Amazon.com (AMZN) shares were down 12.4% after hours to $199.01 as third-quarter earnings of 14 cents a share were down 73% from a year ago and missed the consensus Street estimate by 10 cents. Revenue jumped 43.9% to $10.88 billion but was off $54 million from estimates. Amazon's fourth-quarter revenue guidance of $16.45 billion to $18.65 billion was in line with estimates, but its profit margin disappointed.

The market was pressured by Netflix (NFLX) shares, which tumbled 34.9% to $77.37 after the company conceded its plan to split its operations in two had failed disastrously. The shares have lost 74% of their value since peaking in mid-July.

At the same time, Europe pressured markets after one event that had been set for Wednesday was canceled. The big summit of heads of state will take place, however. European stocks fell back. U.S. financial stocks were the weakest sector.

The Dow Jones industrials ($INDU) closed down 207 points, or 1.7%, to 11,707. The Standard & Poor's 500 Index ($INX) tumbled 25 points, or 2%, to 1,229, and the Nasdaq Composite Index ($COMPX) dropped 61 points, or 2.3%, to 2,638.

Article continues below.
While Amazon.com's results disappointed, shares of Panera Bread (PNRA) were up 9.8% after hours to $127 after third-quarter results of 97 cents were up 27% from a year ago. Revenue grew 22% to $453 million.

Only two of the 30 Dow stocks finished higher -- Intel (INTC) and networking giant Cisco Systems (CSCO), up 0.5% to $17.62 and 0.2% to $24.63, respectively. In addition, only 24 S&P 500 stocks showed gains, along with eight stocks in the Nasdaq-100 Index ($NDX.X), which tracks the largest Nasdaq stocks, ended in the black.

Quest Diagostics (DGX), which provides medical testing services and equipment, was the top S&P 500 performer, up 11.5% to $56.82, thanks to strong earnings. Illumina (ILMN), which makes genetic-analysis equipment, was the Nasdaq-100 winner, up 7.2% to $30.80. The company announced a restructuring to cut costs.

Futures trading suggests a flat open. Boeing (BA), Ford Motor (F), ConocoPhillips (COP) and Norfolk Southern (NSC) are among companies reporting quarterly results. The government will report on durable goods orders and on new-home sales, both for September.

Gold, crude oil move higher

Gold (-GC) and crude oil (-CL) moved higher. Brent crude -- the benchmark European oil -- tumbled, however.


Gold settled up $48.10 to $1,700.40 an ounce after peaking at $1,704.70 on the uncertainty in Europe. Silver (-SI) jumped $1.408 to $33.052 an ounce. Copper (-HG) was down 2.85 cents to $3.4205 a pound.

Crude oil settled up $1.90 to $93.17 a barrel after hitting a 12-week high of $94.62. One reason for the jump: Supplies are shrinking at the oil terminals in Cushing, Okla., the delivery point for the contract. Brent crude was at $111.09 a barrel, down 36 cents.


The dollar moved higher against the euro and other currencies as investors sought safety. The yield on the 10-year Treasury note fell to 2,13% from Monday's 2.23%.


Consumers are in a crummy mood
A lousy day for stocks deteriorated further after The Conference Board said consumer confidence unexpectedly slumped in October to the lowest level since March 2009, when the U.S. economy was in a recession.

The cause: the tremendous stock market volatility and the European debt issue, Chris Christopher of IHS Global Insight wrote clients today. In addition, Americans are not feeling very comfortable with their financial and economic prospects. The foul mood is likely to make shoppers wary of spending a lot in the upcoming holiday shopping season. As a result, he wrote, "Retailers will discount early, deep and hard in order to grab market share and get traffic through their doors."

The decline came as Americans' outlooks for employment and incomes soured. Separate data showed that home prices in 20 U.S. cities dropped more than forecast in August, highlighting one of the obstacles facing the economic recovery in its third year.

The S&P/Case-Shiller Home Price Index said home prices in the 20 markets fell 3.8% in August from a year ago; economists had expected a 3.6% decline. A separate report from the Federal Housing Finance Agency offered a similar view.

"The bottom line is that prices are still going down, and there is certainly no sign of any meaningful rebound in the near future," wrote Paul Ashworth, chief U.S. economist at Capital Research in Toronto.


Energy prices -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Crude oil (-CL)

$93.17

$91.27

17.64%

1.96%
(per barrel)











Heating oil (-HO)

$3.0502

$3.0546

9.75%

19.91%
(per gallon)











Natural gas (-NG)

$3.6580

$3.6040

-0.22%

-16.96%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.6998

$2.6888

6.37%

10.05%
(per gallon)











Brent crude 

$110.92

$111.45

7.94%

17.07%
(per barrel)











Retail gasoline

$3.4460

$3.4510

0.03%

12.17%
(per gallon; AAA)












UPS sees a slow economy, too; 3M cuts guidance
UPS shares were off 2.1% to $69.35. The company's deliveries make it a proxy for the economy. The company said international shipping growth began to cool in the third quarter.

The company’s total U.S. volume was flat in the third quarter because of "the slow U.S. economy," UPS said.

A 4.6% gain in shipments outside the U.S. trailed the 6.2% gain in the previous three months.

At the same time, 3M was the weakest performer among the 30 Dow stocks, falling 6.3% to $77.04. That decline subtracted 39 points from the Dow. The maker of auto parts and Scotch-Brite sponges cut its 2011 profit forecast after reporting third-quarter profit that fell short of analysts’ estimates.

Leaders and laggards
DuPont (DD) earned 69 cents a share in the quarter, easily beating the consensus Street earnings estimate of 56 cents a share. The company lifted the bottom range of earnings expectations for 2011. Shares fell 2.5% to $44.94.

Shares of Deutsche Bank (DB) fell 0.4% to $39.44 in New York. The German banking giant reported a better-than-expected net profit of 777 million euros, or $1.1 billion. Strength across Deutsche's consumer banking segment helped mitigate weaker profits from trading securities amid ongoing volatility from Europe's sovereign debt crisis.

BP (BP) shares in New York jumped 4.2% to $43.52 after the oil company said profits rose to $4.9 billion in the third quarter from $1.8 billion a year ago, when the company was trying to halt the huge Gulf of Mexico oil spill. Revenue grew 31% to $97.6 billion.


First Solar (FSLR) fell 25.3% to $43.27, second-worst among S&P 500 stocks, after announcing this afternoon CEO Rob Gillette is out. Seeking Alpha notes that Gillette only joined the company in October 2009; interim CEO Michael Ahearn ran the show for the previous nine years. Solar companies have been hit hard by intense competition from Chinese companies and cutbacks in solar subsidies in Europe.


AK Steel (AKS) shares slumped 13.6% to $7.47 for the third-biggest retreat among S&P 500 stocks after Netflix and First Solar. The third-largest U.S. steelmaker by sales reported third-quarter sales that missed the average analyst estimate by 4.6%.

Europe continues to gyrate

European stocks tumbled on news that a Wednesday meeting of European Union finance ministers has been canceled only hours after it had been announced. The cancellation boosted worries that negotiations for a definitive plan to contain the region's debt crisis will fall through. 

 

Germany's Xetra Dax Index ($DE:DAX) fell 0.1% to 6,047. France's CAC-40 Index ($FR:PX1) was down 1.4% to 3,174. Britain's FTSE-100 Index ($GB:UKX) dropped 0.4% to 5,526.

 

European leaders are still expected to release a finalized eurozone plan at a summit on Wednesday, The Wall Street Journal reported.

 

So far, banks will likely have to raise about 100 billion euros, or $140 billion, to bolster their capital and take a 40% to 60% writedown on Greek debt.

 

Progress on increasing the firepower of the rescue fund remains vague after leaders meeting over the weekend ruled out using the European Central Bank to expand the fund.

 

A key obstacle to a deal remains a request by European leaders for banks to agree to write off more than half the value of their holdings of Greek debt.  


Short hits from the markets -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0100%

0.050%

-50.00%

-91.67%
5-year Treasury note 

1.000%

1.086%

3.63%

-50.40%
10-year Treasury note

2.128%

2.234%

10.60%

-35.61%
30-year Treasury bond

3.144%

3.278%

7.63%

-27.92%
Currencies











U.S. Dollar Index

76.321

76.262

-3.48%

-3.74%
British pound

1.6013

1.6000

2.79%

2.61%
(in U.S. $)











U.S. $ in pounds

£0.624

£0.625

-2.71%

-2.54%
Euro in dollars

$1.39

$1.39

4.30%

4.02%
(in U.S. $)











U.S. $ in euros

€ 0.718

€ 0.717

-4.12%

-3.87%
U.S. $ in yen 

75.91

76.12

-1.58%

-6.71%
U.S. $ in Chinese

6.36

6.37

-0.33%

-3.90%
yuan











Canada dollar

$0.986

$0.996

3.20%

-1.78%
(in U.S. $)











U.S. dollar 

$1.015

$1.004

-3.10%

1.74%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,700.40

$1,652.30

4.81%

19.63%
(per troy ounce)











Copper (-HG)

$3.421

$3.449

8.52%

-23.08%
(per pound)











Silver (-SI)

$33.0520

$31.6440

9.87%

6.84%
(per troy ounce)











Wheat (-ZW)

$6.3625

$6.4250

4.43%

-19.89%
(per bushel)











Corn (-ZC)

$6.5075

$6.51

9.83%

4.54%
(per bushel)











Cotton 

$0.9968

0.9794

-0.51%

-31.16%
(per pound)











Coffee

$2.3990

2.536

4.81%

-0.25%
(per pound)











Crude oil (-CL)

$93.17

$91.27

17.64%

1.96%
(per barrel)










 
108Comments
Oct 25, 2011 1:27PM
avatar

Speaking of jobs and a weak economy, no country can survive indefinitely being continually fleeced by millions of foreign criminals and freeloaders.  Nevada has the highest unemployment rate AND the highest percentage of illegal workers in the country.  California's deficit is nearly the same as what foreigners here illegally cost them in free educations, free health care, welfare checks for their anchor babies and incarcerations (half of the FBI's most wanted for homicide in America are Mexican citizens).  With U.S. taxpayers supporting their families, Mexicans were able to funnel $21.27 billion of U.S. dollars obtained illegally to their own country in 2010.

Oct 25, 2011 2:07PM
avatar

Let's see if I got this right about the remarks earlier this week about the oil supply reserves being lower than the economists anticipated......

 

Total driving has gone down, less fuel consumed

Consumer spent less on gasoline with their credit cards for the last 8 months

Unemployment still at 9+ %

Production at near flat levels in the US, Better fuel economic automobiles on the road

Record profits by the oil producing corporations through selling less gallons of gasoline at higher costs and the government takes in more tax dollars on high prices

People probably eating less (one way to get obesity down in this country) WalMart profits down

With just these factors in mind, who is selling our oil reserves from our stockpiles? As I see it, our supply reserves should be at record levels and to allow the price of gasoline to go back to last years levels of around $ 2.50 -$2.60 or less

Oct 25, 2011 4:40PM
avatar
I am still amazed that the writers of these articles think that we are out in "left field"....Good grief Charlie....do you think we are idiots or something....we know what is happening in America...we live it, every single day...some of us, every single minute...stop with your reason(s) for the stock market ups and downs..it really does not matter....we are a lot smarter than you or our elected officials give us credit for..
Oct 25, 2011 2:02PM
avatar
Oil continues to rise...why? GREED.
Oct 25, 2011 2:46PM
avatar

Crude oil jumped to $93.92 a barrel, a gain of $2.65 and a 12-week high. The reason: Supplies are shrinking the oil terminals in Cushing, Okla., the delivery point for the contract. Brent crude was down $111.09, down 36 cents.

This makes no sense what so ever, there are oil terminals in Houston, Louisiana,  and on both coasts as well.  Consumer confidence picked up a little in September because oil prices and related gasoline prices were dropping.  Consumer Confidence drops to 2009 levels in October 2011 because gasoline has jumped nearly 20 cents a gallon in a week and a half. Not only are speculators ruining the holiday season they are destroying what is left of the middle class.  You have folks that are now going to have to cut back even more to fill their gas tanks just to get to work and fixed income folks  up north and on the east coast having to cut back on necessities just to heat their homes.  This doesn't include the higher diesel costs to get goods to the consumer, which is going to kill retail.  

 

 This hope and change is leaving me little hope and a lot less change in my pockets.

Oct 25, 2011 2:51PM
avatar
A lousy day for stocks deteriorated further after the Conference Board said consumer confidence unexpectedly slumped in October to the lowest level since March 2009, when the U.S. economy was in a recession.

 

NO **** SHERLOCK, WHY IS EVERYTHING UNEXPECTEDED? WE ARE TIRED OF GETTING PAID ON FRIDAY AND BUYING GAS AND GROCERIES AND SIT HOME AND WAIT FOR THE NEXT CHECK BECAUSE WE ARE BROKE AGAIN. THESE CLOWNS NEED TO CLIMB FROM UNDER THEIR ROCKS AND SEE WHAT'S GOING ON IN THE REAL WORLD, NOT THE MAKE UP WORLD THEY MAKE IT OUT TO BE.

Oct 25, 2011 1:59PM
avatar

"With U.S. taxpayers supporting their families, Mexicans were able to funnel $21.27 billion of U.S. dollars obtained illegally to their own country in 2010."

 

Endeavor:  Well, we could have used that money for drone strikes in Mexico if that would make you feel any better.

 

It would make me feel better if Obama was concerned about the U.S. citizens who have to pay taxes and support their own families who have been driven to poverty trying to compete with foreigners in the workforce who do neither and if he would stop suing states trying to protect themselves from foreign invasion.

Oct 25, 2011 1:43PM
avatar

BP shares in New York jumped 4.9% to $43.88 after the oil company said profits rose to $4.9 billion in the third quarter from $1.8 billion a year ago, when the company was trying to halt the huge Gulf of Mexico oil spill.

 

How can our Government let this continue when we have people starving to death because they can't afford to eat? The crime rate has gone through the roof because people are trying to survive and BP is bragging on an increase of $3.1 billion dollars for the quarter. What is it going to take before the dummies in Washington wake up? Gas prices are killing any sign of recovery that we have. I just don't understand. Something has got to be done and soon!

Oct 25, 2011 2:38PM
avatar

Total driving has gone down, less fuel consumed

Consumer spent less on gasoline with their credit cards for the last 8 months

Unemployment still at 9+ %

Production at near flat levels in the US, Better fuel economic automobiles on the road

Record profits by the oil producing corporations through selling less gallons of gasoline at higher costs and the government takes in more tax dollars on high prices

People probably eating less (one way to get obesity down in this country) WalMart profits down

With just these factors in mind, who is selling our oil reserves from our stockpiles? As I see it, our supply reserves should be at record levels and to allow the price of gasoline to go back to last years levels of around $ 2.50 -$2.60,

 

Do you think they make this all up as they go?  LOL

Oct 25, 2011 3:57PM
avatar
@ Jeremy,

I believe that you are on the right tack, but missing a key element.  Why did US corporations outsource?  To bring in goods at a lower cost through cheaper labor/benefits and foreign government incentives to open product plants in other countries.

Who is to blame? The corporation which is mandated to maximize profits?  Or the politicians that allowed it through Free Trade Agreements?  I blame Washington, because they are elected by the population to watch over us, not sell us out.
Oct 25, 2011 2:48PM
avatar

.... ' since March 2009 when the US "was" in a recession' ... Really ???

 

The problem with these reports is that they are provided by six figure Armani-suited gurus that follow the manipulative antics of the Wall Street casino boys who are totally insulated from the realities of our absolutely disasterous economy. Perhaps I am misinformed, but I did not know that this country was OUT of the recession that began over three years ago. I guess it's always a cruise on the Good Ship Lollipop when one does not have to worry about paying the rent, putting food on the table, or getting an enema at the gasoline station. Only the elitists at the very top of the food chain would have the hubris and the arrogance to declare that we are out of the recession ... to me and millions of others it is as bad or worse now than when it began.

Peace to all ... 

Oct 25, 2011 6:06PM
avatar

tumbes56 is right on the mark.  Do all these traders, speculators, pundits, economists and corporate  executives think we are idiots.  The vast majority of Americans know our economy is in shambles, as is Europes.  We also know house prices will continue to decline or not go up for the forseeable future.  We also know that oil and gas are manipulated by speculators and probably some unknown others for their own personal gain.  Hence, one oil terminal in all of the US has a lower supply of oil and the price of oil and gas goes up?  What about all the other terminals in the US?  What about when the value of the dollar goes up and oil still goes up?  We are not BOOBS!!  November, 2012 should be very scary for any incumbent.

Oct 25, 2011 2:06PM
avatar

Hey "Just enter" ,that's the only reason we do all these stupid "wars" is to get the money overseas where they can steal it. It has nothing to do with terrorists or anything other than the big fat government gravy train of greed. Now all the candidates have the balls to run on platforms of sticking it to us with new tax plans. We don't need new taxes, we need government to stop stealing the money and spend it here, 

avatar
Just in final report on eurozone plan.

Merkel will be responsible for turning off all the lights in Europe as their economy collapses.
Sakozy will be responsible for rounding up all the top Paris fashion models and safely getting them to New York. 
The rest of Europe will be responsible for paying the central banks all their monies and then being indentured servants to the Red Chinese for the rest of their lives. 

Pretty much it looks like a great plan to me. At least all those Paris fashion models will be saved. Leave it to Sakozy to think about them above all others.
Oct 25, 2011 2:18PM
avatar

"The big stock market rally abruptly stalled after three days of gains"

 

WRONG!!

 

"The big stock market rally, or more likely, the big PUMP and DUMP continues as nothing has changed on FRAUD STREET! 

Oct 25, 2011 7:51PM
avatar
Have given up on looking for a job, everything I own is paid for and we have adjusted to where we can survive on my wife's pay. {And no I am not getting any goverment assistance}!! For sure not an elaborate life but we survive and the goverment only gets taxes on one income. We didn't ask for this but we try to survive. Amazing what you can do when you are" forced "into something.
Oct 25, 2011 3:34PM
avatar
Does anyone really believe the paranoid, delusional puke that the reason the U.S. economy is down is because of illegal workers from Mexico or anywhere else. Talking about foreigners taking U.S. jobs, how about all those tech graduates from India and other countries. They take good, high paying jobs in the US because they're smart enough to graduate with degrees in engineering, science, and mathematics. So we have a bunch of dumb kids going to college and getting basically worthless degrees. Then mammies and daddies blame the illegal workers because their kids can't find a job. Basically what it boils down to is that mommies and daddies have spoiled the kiddies rotten, but deny that reality. It's easier to blame illegal workers who take jobs shoveling manure at dairies, than to ask why the kids are spoiled and inept.
Oct 25, 2011 4:10PM
avatar
why does OIL keep going up and up while all the news is down down down???
Oct 25, 2011 2:01PM
avatar

No one was actually stupid enough to think the stock market would sustain ..... did you?? If so ... you are a dumber than the morons on TV telling you to invest. Every part of the US economy is flawed .... there isn't one thing that would show me that the stocks will continue to rise??

 

Unemployment, the housing market, the devaluation of the dollar, the drop of our credit rating, the unpayable deficit. It's a complete clusterfuke. Thank you Barry for doing such a marvelous job in the last 3 years!! Four more years and we'll all be living in tents!! What a joke!

Oct 25, 2011 3:53PM
avatar
oil went up because the speculators know that middle class and the poor need to heat their homes. what a racket, as good as the mob, they should all be in jail counting the idiots in washington letting them get away with it,, i wrote to my congressman and he said it is the epa doing it, OK.
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