Stocks slip ahead of Fed and ECB decisions

The Dow drops 64 but ends July up 1%. Traders are waiting for the Fed and European Central Bank to act. Cirrus Logic shares soar on growth projections. Will Apple split its stock? Facebook gets smashed.

By Charley Blaine Jul 31, 2012 12:30PM
Charley BlaineUpdated: 6:44 p.m. ET

Stocks overall fell back in a late-day swoon as the Federal Reserve started a two-day meeting and investors waited to see if the European Central Bank can do something to jump-start the European economy.

The Fed meeting and the ECB meeting on Thursday are two of three big economic events this week that will set the table for August. The third -- and possibly the most important -- is Friday's report on U.S. unemployment and payroll employment changes.

A number of big technology shares surged after semiconductor-maker Cirrus Logic (CRUS) reported better-than-expected earnings late Monday. The company expects a 70% gain in its fiscal-second-quarter revenue. That's generated lots of buzz on Wall Street because, as Barron's noted, Cirrus gets 60% of its revenue from Apple (AAPL). Cirrus shares were up $6.93 to $36.77, after reaching a 52-week high of $37.27.

Apple, meanwhile, closed up $15.73 to $610.76, in part because of talk the company may be considering splitting its stock -- a move that might result in its being included in the Dow Jones Industrial Average ($INDU). The Dow is price-weighted, meaning the higher the price, the more influence a stock has on the index. Apple at $600 would swamp the index.

The Dow closed down 64 points to 13,009. The blue chips had fallen 3 points on Monday. The Standard & Poor's 500 Index ($INX) slid 6 points to 1,379, and the Nasdaq Composite Index ($COMPX) was off 6 points to 2,940.

Article continues below.
The Nasdaq-100 Index ($NDX) with a gain of less than 1 point to 2,643, mostly thanks to Apple's big close. Apple's finish was its first above $600 since July 24, when it announced fiscal-third-quarter results that came up short of analysts' estimates.

The market's swoon at the end of the day was due to traders betting the Fed won't make a big move on Wednesday, preferring to get more data on jobs before deciding. It may be September before the Fed makes a decision. Another reason for a delay is that a number of presidents of Federal Reserve banks are more worried about potential inflation.

The Fed decision is due at 2:15 p.m. ET. It will come after the Institute for Supply Management's July manufacturing report, manufacturers' reports on July auto sales and the ADP employment report.

Facebook shares tumble 30% in July
Facebook (FB) shares were off $1.44 to $21.71 after hitting a new low of $21.61, in part because of a report that many of the clicks coming to advertisers came from robotic programs, not actual users.

Facebook fell 30.2% in July and is off 42.9% since going public in mid-May.

Allstate results cheer investors
After the close, shares of Allstate (ALL) were up $1.35 to $35.65  after the company's second-quarter results beat Street estimates. The reason: lower costs for claims from natural disasters. Allstate earned 87 cents a share, excluding some investment results, well ahead of the Street estimate of 52 cents.

High-end retailers were lower after results for Coach (COH), the high-end retailer of leather goods, missed estimates. Coach shares fell $11.25o $49.33 after falling to as low as $49.05, their lowest level of the year.

Despite all this tumult, the Dow ended July with a 1% gain, its sixth monthly gain in seven months. The S&P 500 gained 1.3%, with the Nasdaq up 0.2%. The gains for the S&P 500 and Nasdaq were their fifth in seven months this year.

Oil and gold drop
Energy stocks were lower after BP (BP) reported a loss and crude oil (-CL) settled down $1.72 to $88.06 a barrel.

The national average retail price of gasoline was $3.50 a gallon, up 4.9% since June 30 and up 5.2% since bottoming at $3.326 two days later, according to AAA's Daily Fuel Gauge Report. This is the biggest July price increase since AAA began tracking gas prices in 2000.

Gold (-GC) was down $9.20 to $1,610.50 an ounce. Silver (-SI) was off 11.9% to $27.91 an ounce. Copper (-HG) rose slightly to $3.4175 a pound. 

Corn (-ZC) and wheat (-ZW) were also lower.

Interest rates were lower, with the 10-year Treasury yield falling to 1.492% from Monday's 1.054%.

The dollar, however, was slightly lower against the euro.

Energy prices -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Crude oil (-CL)

$88.06

$89.78

3.65%

-10.90%
(per barrel)











Heating oil (-HO)

$2.8480

$2.8814

5.10%

-2.27%
(per gallon)











Natural gas (-NG)

$3.2090

$3.2140

13.63%

7.36%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.7743

$2.8184

5.41%

4.40%
(per gallon)











Brent crude 

$104.92

$106.20

7.28%

-2.29%
(per barrel)











Retail gasoline

$3.5000

$3.4860

4.38%

6.84%
(per gallon; AAA)












What to expect from the Fed and ECB
The market is hoping (but probably not expecting) the Fed to announce a new stimulus campaign on Wednesday afternoon. The odds are that the Fed will repeat its expectation that rates will remain at record levels through late 2014.

It is expecting the ECB to revive a bond-purchase program to lower borrowing costs for Spain and Italy.

Many economists want the the eurozone nations to give the European Stability Mechanism, its rescue fund, a bank license. The license would give the ESM greater access to money to help support the weaker eurozone members. But Bloomberg News reported the German Finance Ministry said it did not see any need to give the rescue fund the license.

Government data showed consumer spending fell in June for the first time in nearly a year when accounting for inflation, while household income rose 0.5%.

The S&P/Case-Shiller composite index of 20 metropolitan areas gained 0.9% in May on a seasonally adjusted basis, topping economists' expectations for a 0.5% gain. The report indicates the housing recovery continues to gain traction.

Consumer confidence unexpectedly rose in July to 65.9 versus expectations of 61.5 as Americans were more optimistic about the short-term outlook than they were about their current conditions.

Pfizer results cheer Street; Dun & Bradstreet puts itself on the block
Pfizer (PFE) was the top performer among the 30 Dow stocks, rising 33 cents to $24.04. The largest U.S. drug maker reported higher-than-expected quarterly earnings and affirmed its 2012 profit forecast.

Dun & Bradstreet (DNB) was the top-performing S&P 500 stock, up $9.49 to $80.19. The venerable information-services provider has approached investment banks about exploring a sale of the company. It has roots dating to 1841 and maintains data on some 205 million companies worldwide for use in credit decisions, business-to-business marketing and supply chain management.

UBS (UBS) shares were off 46 cents to $10.60 in New York. The Swiss banking giant took a loss of some $350 million from the ill-fated Facebook initial public offering. The Facebook loss, which came because more shares in the IPO were delivered than the company wanted, cut UBS' profit nearly in half. The bank earned 425 million Swiss francs (or $434 million) in the quarter, down from 1 billion Swiss francs a year ago.

Deutsche Bank (DB) shares were up 6 cents to $30.34 after the Germany bank said it will cut 1,900 jobs as part of efforts to realize savings of about 3 billion euros ($3.69 billion). The move reflects the bank's resolve to wade out of tough business conditions that have hurt its performance.

Anheuser-Busch InBev (BUD) fell short of second-quarter earnings expectations, selling less beer and spending more on distribution and marketing new U.S. brands. The company's U.S.-listed shares fell $1.85 to $79.22.

Health insurer Aetna (AET) posted weaker quarterly earnings as expenses rose, but the results were still higher than  analysts had expected. Shares fell $1.08 to $36.06.

Only nine of the 30 Dow stocks finished with gains, with AT&T (T), up 49 cents to $37.92, finishing just behind Pfizer. Home Depot (HD) was the laggard.

Meanwhile, 121 S&P 500 stocks were higher, led by Dun & Bradstreet and Goodyear Tire & Rubber (GT). Coach and Humana (HUM) were the laggards.

Thirty-five Nasdaq-100 stocks showed gains, with Avago Technologies (AVGO) the leader. Fossil (FOSL) was the laggard.

Short hits from the markets -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.1000%

0.100%

25.00%

900.00%
5-year Treasury note 

0.599%

0.618%

-17.83%

-27.83%
10-year Treasury note

1.492%

1.504%

-10.07%

-20.26%
30-year Treasury bond

2.577%

2.579%

-6.73%

-10.80%
Currencies











U.S. Dollar Index

82.710

82.868

1.17%

2.72%
British pound

1.5686

1.5711

-0.11%

0.96%
(in U.S. $)

 








U.S. $ in pounds

£0.637

£0.637

0.11%

-0.95%
Euro in dollars

$1.23

$1.23

-2.45%

-4.96%
(in U.S. $)

 








U.S. $ in euros

€ 0.812

€ 0.816

2.51%

5.22%
U.S. $ in yen 

78.25

78.17

-1.88%

1.49%
U.S. $ in Chinese

6.38

6.38

0.17%

0.91%
yuan











Canada dollar

$0.998

$0.998

1.57%

1.72%
(in U.S. $)

 








U.S. dollar 

$1.003

$1.002

-1.54%

-1.69%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,610.50

$1,619.70

0.39%

2.79%
(per troy ounce)

 








Copper (-HG)

$3.418

$3.416

-2.26%

-0.54%
(per pound)

 








Silver (-SI)

$27.9140

$28.0330

1.09%

0.00%
(per troy ounce)

 








Wheat (-ZW)

$8.8825

$9.1450

17.30%

36.08%
(per bushel)

 








Corn (-ZC)

$8.0525

$8.200

26.86%

24.56%
(per bushel)

 








Cotton 

$0.7134

0.7113

0.01%

-22.19%
(per pound)

 








Coffee

$1.7440

1.7835

2.17%

-24.06%
(per pound)

 








Crude oil (-CL)

$88.06

$89.78

3.65%

-10.90%
(per barrel)










 

158Comments
Jul 31, 2012 1:15PM
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I personally do not believe that NBC has any idea why stocks go up or down

Jul 31, 2012 1:45PM
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Have you noticed the amount of homeless Americans walking the streets? New college graduates, senior citizens, unemployed Americans? No matter what the media tells you.......THERE ARE NO JOBS!
Jul 31, 2012 2:42PM
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Libtards - The amount of $$$ management makes has little to no effect on jobs. The only way a smart company hires more workers is if there is an increased demand for their products or services. If the CEO is making $12 / hr they still won't hire unless they need more people to meet product / service demands. 

Neocons - Lowering taxes on CEO's has no effect either. Just because a guy making $15M a year pays lower taxes does not mean he is going to hire more workers or buy more equipment. There has to a real reason to increase production other than "I have more money".

Gooberment - GTF out of the way and quit trying to "fix" sh*t. You have no clue what you are doing. 


Jul 31, 2012 1:50PM
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Funny how the market always "struggles" just before a Fed mtg in hopes they will get more taxpayer heroin from Uncle Ben. Like recalcitrant children acting up for attention. Then big swing up when they get their way or down if their insatiable need for more free money is not prompty met.  Just like the spoiled brats they are, albeit rich brats.
Jul 31, 2012 1:34PM
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This economy has no legs, the big crash is coming the Federal Reserve Banking Cartel cannot continue to pump fiat dollars backed by nothing and expect a good outcome...no country has ever printed their way to prosperity...if there is one that has and if it did work, why are we not doing it now...the United States cannot continue to add to the almost 16 trillion deficit and pay this back it is truely impossible to pay back this money owed to other countries..look for a devalued dollar,.. this means one thing people of the United States is going to suffer high inflation costs, people of the U.S. congress has sold the United States out to the bankers of Wall Street and the Federal Reserve Banking Cartel...and they want to take your guns so the UN can take the US over this is not over, the UN is coming for  your guns.

Jul 31, 2012 1:30PM
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You have to wonder when people will realize that the Fed is powerless against the forces that are arraying to bring on a huge Depression.
Jul 31, 2012 2:44PM
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Pete - You are a big joker -- 150K jobs a quarter, and that is good? Ended the war in Iraq and they are falling apart. He abandoned Iraq, and history will show that... Passes Universal Health Care which no one wants, and it is SO GREAT that there are of 2,000 waivers. He got Bin Laded because of Bush policies... You are half-way there, now, if you would only add reason to your thinking the conservative conversion will take hold and your journey will be complete. 
Jul 31, 2012 2:28PM
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Who needs a job when the Obummer Admin is welcoming all to the world of SS disability and food stamps. 
Jul 31, 2012 4:19PM
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380,000 new people walking into the unemployment office every month.
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The Death Spiral of Lost Jobs and an ever weaker and weaker economy with the government and Federal Reserve not doing anything to stop it rather they have been accelerating the Death Spiral since 2008.

 

Pretty much by the end of the year or 2013 the final and complete collapse of the US economic system will happen and marshal law will have to be put into place for people merely to survive.

 

QUOTE

Economist Richard Duncan: Civilization May Not Survive 'Death Spiral'

Money Morning

By Terry Weiss, Money Morning

Richard Duncan, formerly of the World Bank and chief economist at Blackhorse Asset Mgmt., says America's $16 trillion federal debt has escalated into a "death spiral, "as he told CNBC.

And it could result in a depression so severe that he doesn't "think our civilization could survive it."

And Duncan is not alone in warning that the U.S. economy may go into a "death spiral."

Since the recession, noted economists including Laurence Kotlikoff, a former member of President Reagan's Council of Economic Advisers, have come to similar conclusions.

Kotlikoff estimates the true fiscal gap is $211 trillion when unfunded entitlements like Social Security and Medicare are included.

However, while the debt crisis numbers are well known to most Americans, the economy hasn't suffered a major correction for almost 4 years.

So the questions remain: Is the threat of collapse for real? And if so, when?

A team of scientists, economists, and geopolitical analysts believes they have proof that the threat is indeed real - and the danger imminent.

One member of this team, Chris Martenson, a pathologist and former VP of a Fortune 300 company, explains their findings:

"We found an identical pattern in our debt, total credit market, and money supply that guarantees they're going to fail. This pattern is nearly the same as in any pyramid scheme, one that escalates exponentially fast before it collapses. Governments around the globe are chiefly responsible.

Click here to see how banks are escalating the collapse...
"And what's really disturbing about these findings is that the pattern isn't limited to our economy. We found the same catastrophic pattern in our energy, food, and water systems as well."


According to Martenson: "These systems could all implode at the same time. Food, water, energy, money. Everything."

Another member of this team, Keith Fitz-Gerald, the president of The Fitz-Gerald Group, went on to explain their discoveries.

"What this pattern represents is a dangerous countdown clock that's quickly approaching zero. And when it does, the resulting chaos is going to crush Americans," Fitz-Gerald says.

END QUOTE

 

Jul 31, 2012 4:10PM
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"Let's face it --- the whole college thing was another scam started by yet another federal intervention, the GI Bill.  That and other government programs expanded universities into extremely marginal study areas. Now 90% of colleges have become just liberal warehouses and generate barely literate graduates."

Apparently you don't talk to anyone, just listen to the radio. First, I agree that college is a scam for the tuition cost while there is no warranty on it's output. Conversely, No Child Left Behind was so lame that it left more than a generation shy of life skills and adequate knowledge. The biggest problem with college is that it isn't relevant. A core class should be Self-Employment. A lot of the lectures and lessons could be better provided as Pay-Per-View. They are sports-oriented which is a factor you can find in every failed civilization... too much emphasis on celebrity not enough on competence. Finally... college graduates don't have jobs because corporations are no longer good businesses in America. The Founders are dead. The replacements are financial pariah. Stop preaching from your couch and start LISTENING to what the rest of the world is saying. You and your outdated archaic opinion are antique. All those grads could be moving us ahead. Too bad all you "Eagles" are anchoring us to a century that ended 12+ years ago.
Jul 31, 2012 6:23PM
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For the last three or four decades we have been hard at work transforming from a producing country to a consumer country.  Due to this transformation, there has been less and less wealth derived from producing real goods.  Since no growth stagnates our ponzi scheme system, wealth was instead created through the stock market and housing appreciation.   This "paper" wealth creation gave us the illusion of success while our working class was being sold out as their jobs were allowed to go overseas to benefit a few with short term profits.    The story was that somehow all the good "college boy" jobs would stay here and all the menial factory jobs would go away.  The assumption must have been that our entire working population would be excellent college material.  Yeah right.   Well, when the factory jobs go overseas, the front office "college boy" jobs go with them.  

 

We're still telling everyone to go to college and the government will loan them all the money they need to hang themselves.  That's the next balloon that's going to pop.  Only you can't get away from student loans through bankruptcy anymore.  The IRS will come after you.  They will own you.  

 

I'm not saying that smart kids shouldnt go to college if their career goals require that preparation but  I just don't see how all these psych and history majors are ever going to pay this off.        

Jul 31, 2012 2:10PM
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heh didn't I just hear this? oh right, stocks flat, stocks struggle, stocks down, just like the entire nation, DOWN! and almost out, just hang in there til Nov for a market boom,

 

meanwhile in other news, obama is claimed to be a decendant of the FIRST slave, ladies and gentlemen, not just any slave, but the FIRST slave, ( go prove that one!!) oh right, "they" also say there no definitive proof of this, hahahaha!!! HAHAHAHAH!! ahhahahahaha!!!! heheh, hahaha!!! sorry, silly me, but why the hell run this idiotic fictional story in the first place, answer: because the lefty loonies are desperate in this last few months of the osama regime, sooooooooo pathetic, so pathetic, then again what do u expect from the disgustingly corrupt osamazombies, oops! I mean obamazombies

Jul 31, 2012 3:12PM
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Stocks, waiting for more Wallstreet Welfare=Quantitative Easing or please bail me out for making all those mistakes, I promise I won't do it again!
Jul 31, 2012 3:39PM
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OH WAIT !!!

The homeless can take all those jobs, "Americans won't do".

Let's face it --- the whole college thing was another scam started by yet another federal intervention, the GI Bill.  That and other government programs expanded universities into extremely marginal study areas. Now 90% of colleges have become just liberal warehouses and generate barely literate graduates.

SO -- you can't be surprised that college graduates are walking the streets.   They need to take those migrant worker jobs or learn a trade and do something valuable.
Jul 31, 2012 7:03PM
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Wouldn't it be great if MSN could actually send a code to destroy or fry the computers of spammers on their sites.... .....  Someone was on here today actually commenting, making some decent posts, but now feels the need to spam us again.......I don't understand how he can keep his account....  Come on MSN, please put a stop to this garbage..  Everyone needs to report Someone, send a note the moderator to put an end to Someone's spamming....  
Jul 31, 2012 4:56PM
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Royal,

 

That is the most reasonable post I have seen for a long time. 

 

We have become a country that is rich and developed a society that is very wealth

top heavy and becoming very poor at the core.  Soon the middle( class which is slowing  degenerating) and the lower class which is beginning to expand with the downward movement of the middle class wll no longer be able to support the

upper class and the whole pyarmid will collapse.  Sort of like a giant ponzi scheme.

 

We are beginning to look more and more like a third world country.  The only

difference might be that we started out with more and we could still recover

from this with a little more effort from our leaders.

 

We are better than this and we should start showing it.

Jul 31, 2012 2:36PM
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"Have you noticed the amount of homeless Americans walking the streets? New college graduates, senior citizens, unemployed Americans? No matter what the media tells you.......
THERE ARE NO JOBS!"

But there ARE CEOs making 500 times more than their personnel who have no idea what the core business actually does. They are- financial administrators. I was an executive directly affected by the enactment of Gramm Leach Bliley. it has been a very long and hard fight but awareness is the key. Keep fighting to overthrow the New World Order. By the words in your posts... you know the score.

Self-employed? You took a Leap of Faith once and it worked. LOOK out your window and create some new Faith. There is an entire sub-economy growing stronger everyday the controlled and manipulated economy leads us to decay.
Jul 31, 2012 3:18PM
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I had a conversation with a guy in the Health care business the other day,He said with the pre-excisting conditions clause most if not all people without health care will pay the penalty and if anything major happens with their health they will purchase healthcare on the way to the hospital.Those that don't have the money to pay the penalty won't anyway.

Jul 31, 2012 8:21PM
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Employment numbers won't look bad for July, but...

That's because employers have been hanging on to employees, hoping the downturn would be temporary.  But come August, hang onto your hats.  Reality will set in, and the first round of massive layoffs will come. 

There's just no demand.  It's pointless to make product or provide services when people aren't buying anything, but paying down debt (and frankly making the individual best choice by doing so).

I hope everybody has their seatbelt on, because it's gonna be a bumpy ride in 2013, much worse than 2008-09.  The working men and women of America will have their collective backs, spirits, and wallets broken while the moneychangers on Wall Street laugh and wait for another bailout.

Thanks for the memories, America.  It was fun while it lasted, but the dream is now over.

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