Dow falls 161 as European worries mount

Global jitters cause investors to seek safety first. The biggest fear: How will Spanish banks survive bad loans? Oil falls below $88 a barrel. Gold tumbles, then rebounds. The euro falls to 2-year lows. Intel leads the Dow. Facebook slides again.

By Charley Blaine May 30, 2012 12:40PM
Charley BlaineUpdated: 9:44 p.m. ET

U.S. stocks slumped today, giving up all of Tuesday's gains in the process, as investors around the world worried that Spain's banking system might implode and cause chaos across Europe.

The Spanish crisis caused the euro to fall to its lowest levels against the dollar since the summer of 2010. Greece was an issue on a new poll suggesting a June 17 parliamentary victory by leftists. Stocks across Europe were sharply lower, with markets in Spain, Greece and France especially hard hit.

Crude oil (-CL) in New York fell below $88 for the first time since October. Gold (-GC) dropped to its lowest levels since July 2011 and then rebounded. The yield on the U.S. 10-year Treasury note fell below 1.7%, its lowest level ever.

At the same time, investors were dismayed by a report showing pending home sales in April had fallen 5% from March. But the National Association of Realtors said pending sales -- where contracts have been signed but aren't closed -- were up 14.4% from a year ago. Homebuilding shares moved lower.

The Dow Jones industrials ($INDU) tumbled 161 points to 12,420; the blue chips had been down as many 173 points. Today's decline comes after the Dow had gained 126 points on Tuesday. The Standard & Poor's 500 Index ($INX) dropped 19 points to 1,313, and the Nasdaq Composite Index ($COMPX) fell 34 points to 2,837.

Article continues below.
The Nasdaq-100 Index ($NDX) was off 22 points to 2,537. Apple (AAPL) was up $6.90 to $579.17, adding 5 points to the index. CEO Tim Cook promised a host of new products in the fall at a Tuesday conference. One product that's widely talked about is an Apple television.

Facebook (FB) shares were off 65 cents to $28.19 after falling to as low as $27.86. The close was off 25.8% from its initial public offering price of $38.

Game-maker Zynga (ZNGA), whose fortunes are tied to Facebook, fell 22 cents to $5.87. Since May 17, the day the Facebook IPO was priced, Zynga shares have fallen 29%. They're off 60% since hitting a closing high of $14.69 on March 2.

After hours came the disclosure of a casualty of the Facebook IPO. Travel site Kayak looks to have halted its own IPO effort. A roadshow to pitch the company's stock that had been expected to start this week was halted, reports said.

Morgan Stanley, the lead bank on the Facebook deal, also is leading the Kayak deal. With Facebook proving a disappointment for many investors, timing for the Kayak deal is uncertain now, The Wall Street Journal said. The Journal said that the company is assessing investors' current appetite for Internet stock deals.

May has been a crummy month
If today's declines hold through Thursday, May shapes up as the worst month for stocks since at least September, with the Dow and S&P 500 down 5.9% and 6.2%, respectively. The Nasdaq, off 7.6%, is looking at its worst monthly performance since May 2010.

May 2012 offers another statistical oddity: It's the first month since May 2010 where the Dow did not rise for two days in a row.

The Dow is still up 1.7% for the year after falling 6.5% from its 2012 high on May 1. The S&P 500 is up 4.4% for year, with the Nasdaq up 8.9%.

Futures trading suggests a modestly lower open on Thursday.

Energy prices -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Crude oil (-CL)

$87.82

$90.76

-16.26%

-11.14%
(per barrel)











Heating oil (-HO)

$2.7438

$2.8132

-13.83%

-5.85%
(per gallon)











Natural gas (-NG)

$2.4180

$2.4850

5.82%

-19.10%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.7739

$2.8335

-11.22%

4.38%
(per gallon)











Brent crude 

$103.47

$106.68

-13.44%

-3.64%
(per barrel)











Retail gasoline

$3.6260

$3.6360

-4.98%

10.68%
(per gallon; AAA)












Thursday and Friday bring big economic reports
Today's declines come just before two days filled with important economic reports.

Thursday's reports include an important revision to first-quarter gross domestic product, a snapshot of the economy's condition, and the weekly report on jobless claims. In addition, the  ADP National Employment Report, which will offer a look at private-sector employment trends in May, comes out, along with the Challeger, Gray and Christmas report on layoffs in May.

And then there's the report from the Chicago Purchasing Managers on business conditions in May. It's widely considered a good barometer on the economy.

On Friday, the Labor Department reports on nonfarm payroll employment and unemployment. Automakers report May sales, and the Institute for Supply Management issues its May report on manufacturing.

At the same time, Germany will report on unemployment for April. And there will be reports on manufacturing from Germany, Britain and the European Union on Friday.

The euro and oil fall; gold rallies

The euro fell to $1.23962 at 1:35 p.m. ET, its lowest level since June 30, 2010. The U.S. Dollar Index, which measures the greenback against a basket of currencies, settled at 83.086, up from Tuesday's 82.581. It was the highest level for the index since October 2010.

Crude oil settled down $2.94 to $87.82 a barrel. Brent crude fell $3.21 to $103.47 a barrel. The average U.S. price for unleaded gasoline was $3.626 a gallon, down from $3.636 a gallon on Tuesday, according to AAA's Daily Fuel Gauge Report.

Gold settled up $14.70 to $1,563.40 an ounce, after dropping to as low as $1,530.40. Silver (-SI) was up 19.2 cents to $27.983 an ounce. Copper (-HG) was down 7.2 cents to $3.39 a pound.

Interest rates were lower, with the 10-year Treasury yield falling to 1.625% from 1.731% on Monday. The yield hit as low as 1.619%. According to Reuters, that was the lowest yield in at least 60 years.

A run on Spanish banks?
The market's decline came on a report that deposits in Spain's banks are shrinking. Retail and corporate deposits in Spanish banks fell €31.44 billion ($39.31 billion) to €1.624 trillion, their lowest since the eurozone debt crisis began, according to data published by the European Central Bank.

Spanish banks are especially vulnerable because of the country's deep recession -- its second in three years. The recession has pushed its unemployment rate to 24.4%.

At the same time, the European Commission said the eurozone risks "financial disintegration" and should use its new bailout fund to recapitalize distressed banks directly while embarking on a transnational banking union.

The worries pushed Spain's Ibex 35 Index ($ES:IB) down 2.6%. France's CAC-40 Index ($FR:PX1) fell 2.2%. Germany's Dax Index ($DE:DAX) was off 1.8%. Britain's FTSE-100 Index ($GB:UKX) fell 1.8%.

Meanwhile, the latest poll suggests that the leftist Syriza party in Greece was leading the pro-bailout conservatives ahead of a parliamentary election June 17 that could determine if the nation remains in the euro zone.

Polls taken over the weekend had shown the conservative New Democracy Party leading.

Has housing lost its momentum?
The pending-home sales report was a disappointment; most people who watch housing had expected a gain and confirmation that a housing recovery is taking hold.

But pending sales in April fell after three months of gains. While April's index level of 95.5 was off from March, it was still up 14% from a year ago.

Nonetheless, housing shares fell. Lennar (LEN) was the second-worst-performing S&P 500 stock, down $1.93 to $26.82.

A lot of red in U.S. stocks
It was hard to find stocks in the black today.

Chip-giant Intel (INTC), up 4 cents to $26.13, was alone among the 30 Dow stocks in showing a gain today. For several hours, Wal-Mart Stores (WMT) was alone in the black, but the shares fell back to a loss of 24 cents at $65.44.

Only 28 S&P 500 stocks were showing gains, led by Monsanto (MON) and Whirlpool (WHR).  Meanwhile, just 15 Nasdaq-100 stocks were higher, led by Vertex Pharmaceuticals (VRTX) and Apple.

All 10 sectors of the S&P 500 were lower. The hardest-hit sector was energy. The Energy Select Sector SPDR (XLE) exchange-traded fund was down $2.03 to $64.19. Exxon Mobil (XOM) and Chevron (CVX) were off $2.14 to $79.79 and $2.61 to $97.63, respectively.

Banks were weak. JPMorgan Chase (JPM) dropped 67 cents to $32.96.

If you wanted big losers, look no further than Sears Holdings (SHLD), down $5.16 to $52.34.

Research In Motion (RIMM) dropped 88 cents to $10.35. Late Tuesday, the maker of the BlackBerry device said it has hired JPMorgan Securities and RBC Capital to advise on its strategic options. Which means basically whether to put the company up for sale. It also sees an operating loss for its first-fiscal quarter.

And lastly, we note Pep Boys-Manny Moe & Jack (PBY). Shares of the auto-parts company were down $2.20 to $8.89. Reason: An $804 million buyout of the company collapsed. Would-be buyer Gores Group canceled the deal after Pep Boys' profits began to shrink. Gores Group will pay Pep Boys a breakup fee.

Short hits from the markets -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0700%

0.080%

-22.22%

600.00%
5-year Treasury note 

0.690%

0.764%

-14.92%

-16.87%
10-year Treasury note

1.625%

1.731%

-15.14%

-13.15%
30-year Treasury bond

2.718%

2.842%

-12.58%

-5.92%
Currencies











U.S. Dollar Index

83.086

82.581

5.37%

3.18%
British pound

1.5494

1.5642

-4.60%

-0.28%
(in U.S. $)

 








U.S. $ in pounds

£0.645

£0.639

4.82%

0.28%
Euro in dollars

$1.24

$1.25

-6.54%

-4.44%
(in U.S. $)

 








U.S. $ in euros

€ 0.808

€ 0.801

6.99%

4.65%
U.S. $ in yen 

79.24

79.54

-0.95%

2.77%
U.S. $ in Chinese

6.38

6.34

1.25%

0.85%
yuan











Canada dollar

$0.972

$0.978

-4.09%

-0.93%
(in U.S. $)

 








U.S. dollar 

$1.030

$1.023

4.26%

0.94%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,563.40

$1,548.70

-6.06%

-0.22%
(per troy ounce)

 








Copper (-HG)

$3.390

$3.462

-11.48%

-1.34%
(per pound)

 








Silver (-SI)

$27.9830

$27.7910

-9.78%

0.24%
(per troy ounce)

 








Wheat (-ZW)

$6.5375

$6.5675

-0.11%

0.15%
(per bushel)

 








Corn (-ZC)

$5.5950

$5.625

-11.79%

-13.46%
(per bushel)

 








Cotton 

$0.7159

0.7271

-19.92%

-21.91%
(per pound)

 








Coffee

$1.6680

1.679

-7.10%

-27.37%
(per pound)

 








Crude oil (-CL)

$87.82

$90.76

-16.26%

-11.14%
(per barrel)










 

160Comments
May 30, 2012 1:02PM
avatar
Socialism's fun until you run out of other people's money.
May 30, 2012 3:57PM
avatar

The solution to Europe's problems is so easy, get a printing press like Ben Bernanke

If they weren't illegal, I would love to also have a printing press.

I would print money so I could buy a nice boat, car, condo.

Then I would print more and more and would maybe buy the Eiffel tower, Greece, Italy, Portugal, a couple of trillion dollars of US debt, and some companies like Apple, Exxon and WalMart.

Then like the US, Europe could have huge deficits with no end in sight, yet have people flock to their bonds as a safe haven.  It doesn't matter that in 4 years our debt will be close to 20 trillion, and that we won't be able to pay for our government pensions, medicare or medicaid, as long as we have trees for paper and grease for the printing press gears, we can print outselves out of trouble. 

May 30, 2012 3:10PM
avatar
Maybe just Maybe, the market has figured out their is not going to be a 4th annual "Recovery Summer"?    

Or maybe they have finally figured out that you cannot Tax, SPEND, BORROW and Debase your way to prosperity like Obama has been trying to do the last 3.5 years?  


May 30, 2012 2:02PM
avatar

"The big fear: How will Spanish banks survive bad loans?"

 

Good ole "Uncle Sam" will bail them out and the US taxpayers will foot the bill... 

May 30, 2012 2:26PM
avatar

MSN Money continues to take my posts down because I am critical of Pres. Obama, Geitner, and Bernanke and their socialist policies.

 

The Left wing leberal press is attempting to censor my views and restrict my right to freedom of speech.

 

Express you indignity Here!!!!

May 30, 2012 7:53PM
avatar
I see oil is within about $8 of where it was when gas was selling here in Green Bay for 2.42... but funny (NOT) its still 3.69
May 30, 2012 1:35PM
avatar
The nanny staters will continue to try to save their freebies programs, right to the point, where they are in the streets starving.
Then they will acknowledge reality.

May 30, 2012 2:38PM
avatar
AGAIN, THE NATIONAL ASSOCIATION OF REALTORS STATEMENTS CANNOT BE TRUSTED AS BACK IN DECEMBER 2011THEY ADMITTED FIXING THE NUMBERS TO LOOK BETTER THAN THEY WERE. OF COURSE THEY ARE GOING TO INFLATE THE FIGURES FROM A YEAR AGO EVEN THOUGH PENDING HOME SALES ARE DOWN.
May 30, 2012 3:41PM
avatar
Wall Street does not care whether the Market is up or down at the close!  As long as each sales executive makes their quota and their clients are happy, they really don't care about the hurt it causes people!  It's like the movie Trading Places.  Whether the clients make money or lose money, they still get their commissions!!!!
May 30, 2012 4:30PM
avatar
If everybody would just stop playing the socialist game then everything wouldnt be so f***** up.  Germany, where their citizens retire at age 67 has to pay for Greece who retires at age 50.  How dumb is that.  You people better start getting a life or a brain because the whole socialism thing doesnt work anymore.  As an individual its your resposibility to get to your goal.  People are just braindead and lazy.  Losers. 
May 30, 2012 4:12PM
avatar
 Up 125 yesterday, down 145 today, sounds like a bunch of day trading to me, all hidden behind the veil of Euro worries, or Greece, depending on what day it is. 
May 30, 2012 4:14PM
avatar
Yesterday everythings good, today bad.
May 30, 2012 1:51PM
avatar

Oil falls to $ 88. a barrel ? Prices at the gas pumps keep on going up ! JUST SCREW THE PEOPLE AND JUSTICE FOR ALL ?

May 30, 2012 4:14PM
avatar
Typical Obama posturing, always someone else's fault.
May 30, 2012 2:44PM
avatar
 Wow the naive suckers who bought Facebook because they use it and therefore " understand it" just took a 25% haircut. THAT ought to sour them on stocks for a generation
 I bet Warren didn't get burned because he doesn't even own a computer! No Facebook for THAT dude!
May 30, 2012 12:58PM
avatar

another day, another set of rumors, another reversal, more deja vu.  of well, easy come ... easy go.....

 

nibbling and buying on the dips here ... including gold miners and international/emerging markets ... later ...

May 30, 2012 4:04PM
avatar
Investor confidence doesn't exist anymore. Any negative news is causing stocks to slide. I won't be looking to buy for a while. I am only looking for opportunities to sell. Many of us that hold long positions have watched all our YTD gains disappear and some of our stocks show negative performance. The bad news will continue to roll in from Europe and it will continue to kill our stock investments in the US. I'm hoping the stock market will begin to show consistent growth in the fall but I'm not expecting it.
May 30, 2012 1:50PM
avatar

So instead of automakers offering all these useless options like touch screens, backup cams, self parking, etc…  Why don’t they add some of real value, like a PPD system.  (Parking lot Prick Detection)  When some D bag, or their little D bag kids hit your car with their door, PPD system quickly jumps into action with a two pronged effect.

 

The first, gets shots of their plates, routes the number though the DMV, sending their name, address, and insurance info to your inbox.

 

The second deploys two paintball cannons, and strafes to the side of your auto occupied by the prick.  Offering you at least piece of mind against uninsured motorists.

May 30, 2012 1:41PM
avatar

"At the same time, investors were dismayed by a report showing pending home sales in April had fallen 5% from March. But the National Association of Realtors said pending sales -- where contracts have been signed but aren't closed -- were up 14.4% from a year ago."

 

Typical Charley comment...no matter how bad the news is, he'll always have a "but" with some random comment to make things appear better than they really are.  Newsflash Charley...the housing market sucks so just accept it, report the negative news and move on!!  

May 30, 2012 1:35PM
avatar
Gee, it seems like just yesterday that stocks were up on rosy Euro news. Either the investors are knee jerk idiots or the talking heads have no clue as to what really moved the market. Or, hmmmmmmm, could it be a combo of the two?
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