Stocks fall after weak factory order report

Factory orders grow less than expected. The Fed plans to release minutes from its most recent policymaking meeting. Ford says vehicle sales climbed 5% in March, while GM's sales rose 12%. Piper Jaffray boosts its price target on Apple.

By TheStreet Staff Apr 3, 2012 7:57AM

TheStreetImage: Wall Street sign (© Corbis/SuperStock)By Shanthi Bharatwaj


Updated at 12:42 p.m. ET


U.S. stocks were falling Tuesday as investors reacted to weaker-than-expected factory order data and awaited minutes from the Fed's most recent policymaking meeting.

The Dow Jones Industrial Average ($INDU) was down by 64 points, or 0.5%, at 13,201. The S&P 500 ($INX) was down by 7.2 points, or 0.5%, at 1,412. The Nasdaq ($COMPX) was sliding by 6.1 points, or 0.2%, to 3,114.


Twenty of the Dow’s 30 components were losing value, led by JPMorgan Chase (JPM), Exxon Mobil (XOM) and Bank of America (BAC). McDonalds (MCD), Home Depot (HD) and IBM (IBM) were in positive territory.

Stocks were reversing course after gaining on Monday, the first day of the second quarter. The Commerce Department said factory orders rose 1.3% in February, less than the 1.5% economists had predicted. In January, factory orders decreased by 1%.


Automakers are also reporting March sales data. Thirty-eight analysts surveyed by Reuters forecast an annualized sales rate of 14.75 million vehicles, up from 13.1 million a year earlier. General Motors (GM) said sales increased 12%, led by small and compact cars. Shares of Ford (F) were up 1.8% to $12.85 after it said vehicle sales rose 5%. Chrysler reported a 34% rise in sales in March, its strongest performance since the first quarter of 2008.


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The minutes from the most recent Federal Open Market Committee meeting is the highlight of Tuesday’s U.S. economic calendar. Investors will be listening closely for indications that further quantitative easing is on the way. The central bank's current bond-buying program, known as Operation Twist, which involves selling bonds nearing expiration and using the proceeds to buy longer-term ones, finishes in June.


Investors are having a hard time getting a read on the Federal Reserve's view on the economy. Chairman Ben Bernanke has sent mixed signals, acknowledging improvement in the economy, while arguing for accommodative monetary policy.


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Other Fed officials also appear to be divided about the future course of monetary policy. Dallas Fed President Richard Fisher, considered among the more hawkish Fed presidents, suggested in a television interview recently that it might be too premature to talk about tightening. St. Louis President James Bullard however, points to tight global supply to warn that there may be an upward pressure on inflation, which makes further easing unwarranted. Both are, however, non- voting members of the FOMC.
Bond investors will look to the meeting minutes for any signs the central bank might hike interest rates sooner than its stated goal of staying near zero-percent levels at least into late 2014.
“The comments made by Fed officials in public last week on the required need for further easing suggests that not everyone is on the same boat. I am interested in seeing where those differences are? How divided are we?” Paul Nolte, managing director of Dearborn Partners, said.

In corporate news, beer maker Molson Coors Brewing (TAP) said it will buy Europe's StarBev for $3.54 billion. The acquisition is expected to be funded by cash, debt and convertible debt, and is likely to generate $50 million of pre-tax operational synergies by 2015, the company said.


Activist investor Carl Icahn is moving closer to winning a $30 a share bid for refiner CVR Energy (CVI) after he announced that 55% of outstanding shareholders have tendered their shares to his hostile campaign.


Apple (AAPL) was riding a wave of positive sentiment from Wall Street on Tuesday. The shares gained 1.6% to $628.63 in morning trades, hitting another all-time high of $631.30 in the process, after Piper Jaffray lifted its price target on the stock to $910 from $718.  The firm said it believes Apple can become the first company with a $1 trillion market cap, basing its thesis not on "excessive investor exuberance," but earnings growth potential.

The Securities and Exchange Commission is examining Groupon’s (GRPN) revision of its financial results, according to a Wall Street Journal report. On Monday, the online deals company revised its reported fourth-quarter results lower. Its independent auditor determined it has a "material weakness" in its internal controls. Groupon affirmed its first-quarter guidance, reiterating its revenue forecast of between $510 million and $550 million.


The CFTC accused Royal Bank of Canada (RY) of making illegal trades to reap tax benefits. The bank has denied the allegations and vowed to vigorously defend its reputation.


Stocks are trading near multi-year highs, and April could be another promising month. Since 1945, April has been the second-best month of the year for the S&P 500, which has risen an average of 1.6%, trailing only December's 1.8% advance. The market has also posted gains in 70% of Aprils since World War II, according to S&P Capital IQ.


When April’s performance is bad, it has been known to be very bad with the S&P 500 losing more than 5% in three instances, 1962, 1970 and 2002.


Germany's DAX was losing 0.16% while London's FTSE was down 0.3% on Tuesday. Investors were trading with caution before the Spanish government presents its 2012 budget plans to its parliament.

May oil futures were down 43 cents to $104.80. In other commodities, June gold futures were losing $4.90 to $1674.80 an ounce.
The dollar index was trading higher by 0.1%. The benchmark 10-year Treasury was up 6/32 pushing the yield down to 2.175%.
Apr 3, 2012 10:05AM
This market is a reflection of a corrupt political government.  There are employees of these large financial institutions being paid and instructed to maintain a certain value in the market.  They are using taxpayer funds funneled into these organizations with the goal of maintaining a certain harmony for the benefit of a political party prior to an election.  I guess one should throw away all conscience; belly up to the bar, and take a sip.  This lack of moral give a shidt permeates this market and for that matter this country. I'm not a moral beacon but where do you think this process will end up?  Ya got it , the money will end up in the accounts of those in control. 
Apr 3, 2012 8:22AM

How does anyone really know that all the reports such as housing, unemployment, consumer sentiment, manufacturing index etc. are really truthful?  Certainly, when a company reports it's earnings you can dig into to the numbers to see sales and how they really earned their profit whether by actually selling more products/services etc. or was the profit achieved thru closing plants, laying off people, an accounting loophole etc.  It seems every day there is another report, survey etc. and I just don't think they are always truthful and yet the market always reacts favorably when there is even a glint of positive news whether it's verified or not. 

Apr 3, 2012 9:16AM

Government "Stimulus" does not stimulate growth.  It takes money out of the economy, FIRST, thus slowing it down, then attempts to jump start it with targeted spending.  Of course if you have to borrow money to do this, it retards growth moving forward.  This is especially true if spent on normal manitenence (i.e. destorying future demand, by moving it into the present).   Even Roosevelt understood this concept, and only spent 'Stimulus' money on NEW infrastructure projects, like the Hoover Dam, or TVA....


Over the last 3 years our deficits have gotten progressively worse, last years exceeding 1.6 trillion.  This years is estimate is 1.18 trillion, but we are already running ahead of last year.


This run away government spending (including 140,000 new government employees since Obama has taken office) cannot continue.  With government exceeding 26% of GDP, this will not end well...

Apr 3, 2012 11:45AM
yesterday you reported things were looking up with manufacturing excellent????  today you say factory orders off an stocks slide on this news!!!!!!!!!  sounds like someone got the horse before the cart !!!!!!!!  make up your mind which is it orders up or down an which day is correct?
Apr 3, 2012 10:04AM
state our goals, and establish plans on HOW to regain jobs.  no one is doing this.
It's a failure of leadership on the part of ALL politicians in Washington.
Apr 3, 2012 10:31AM



I agree with your response to my post.  I have worked in corporate America all my life and have seen what really goes on behind the scenes to make the quarterly numbers and you are 100% correct that  "figues can lie and liars can figure".  The sad part is the media does not question the numbers but accepts them as reported.  I have listened in on enough quarterly CEO calls with the investment community to listen how the CEO spins the numbers to make it appear all is well because they don't want investors to sell their stock in the company or they want to attract new investors.  There are very few well run companies in America so I guess you just accept that and invest in those companies that you do your research on that really are growing a business the right way and not through "fuzzy math" and other methods.

Apr 3, 2012 9:03AM
Our culture of debt, we should be so proud...
When you think of student loans, you think of students and recent graduates -- younger people in their 20s and 30s working to pay off the thousands of dollars in debt from undergraduate and graduate schools.
It's a good bet you don't think of people in their 60s, 70s and even 80s struggling to [pay off student debt. But new research shows that Americans 60 and older owe $36 billion in educational debt and account for 5 percent of delinquent student loans.
In some cases, the debt was incurred when adults went back to school later in life. In other cases the debt resulted from co-signed loans taken out by children.
According to a report by the Federal Reserve Bank of New York, of the $85 billion in past due student loans, nearly 20 percent was owed by people 50 and older.

Apr 3, 2012 9:14AM
Just got the letter. My health insurance has been raised another $100.00 per month. Vote Obama OUT in 2012!!!  What a mess this administration has made in America!
Apr 3, 2012 9:37AM

Oh yes MirageGuy - let's not forget we have fought two wars for over 10 years, and we basically put that on the credit card too.

Apr 3, 2012 12:20PM

you guys are to funny...


Let me tel you a little story...  As told by someone that owns a business in the USA and why jobs continue  to move to China...


First off, In the USA our education establishment degrades people who do not go to college.  Carpenters, Plumbers, Electricians, Machanics, Machinists, Welders, Bakers, Barbers are looked down upon.  So the schools do not teach any skills necessary to do any of these jobs and thousands more.  Thus, students are not ready to do the majority of jobs in the marketplace.  These jobs go unfilled. 


Next we have the regulatory burden placed on us like no other.  The census and other government information requests must be filled out.  The constant drumbeat of government compliance with new regulations takes up quite a bit of time.


Then we get the new high costs of Obamacare and all theregulations it requires.  Most smaller employers (those with less than 1000 employees) will most likely drop coverage altogether...  Of course those that do not run small business will say thats nonsense, but that exactly what will happen.  Look at the thousands of big business' already expemted from this law.   The playing field for business is more unequal than ever.


I can no longer complain about 3 things.  Workman's comp insurance, state income taxes, and industrial property taxes.   I left Illinois, and those costs have disappeared (income tax) or are vastly lower and more reasonable. 


In my mind it is a wonder any jobs remain in the USA at all.  we have the highest corporate taxes in the world.  I can see all the complainers want more and more, but they do not run out and start business. 


In short, if I were young again, I would not open a business in the USA.  I would do it overseas.  The USA has become an extremely antii-business...  Even American stalwart companies like Apple, who less than 20 years ago made everything here, now make NOTHING here....  Simply amazing....

Apr 3, 2012 11:28AM
this is like a old story ,i once was told ,you keep putting a straw on the back of a donkey and eventual  he will brake , the same goes for the american  people ,make them pay more for gas ,food, and taxes,s . and we will brake too.   it,s just common sense .i think the enemy is trying to do this to our country.
Apr 3, 2012 10:53AM
Liberal;  All markets are a reflection of what folks see in the future.  You are like a lot of victims of the market. You can't value a market by looking at yesterday.  This may seem subtle but with the experience I have this is the numero uno mistake folks make. You need to disciple yourself to look  forward.  Do you have a vison of where we will be 6 months a year two years? Are you confident of what you see?  Folks get scared and fall back at looking at yesterday and thus fail.  Believe me when i say this.  I have friends who have spent their entire lives in this investment climate.  They have zero to none confidence about what is happening.  Is this good enough for you?  Didn't think so!
Apr 3, 2012 8:54AM
I must be blind agree with all the posts. Tell me why is the market above 13200 ?$4.00 gas will it hit 15000 when gas get to $5.00
Apr 3, 2012 11:51AM
Obama says that 9 unelected judges should not be able to overturn a congressional law.  As a constitutional lawyer shouldn't he know that the Supreme Court's job is to interpret the law? 
why, cant we put money in a pool ,and every body can have health care .just think,,,,if you keep the sick people healthy,,,then the healthy people will not get sick  .  hummmm   ,, just might work..
ROFL  you are describing health insurance. The trouble is that the greedy executives running the health care insurance companies are now taking 40 cents of each dollar for their salaries.

It's a license for them to steal money and now it's going to be mandatory. wonder how much the executives paid off congress and the president to do this. 
Apr 3, 2012 9:12AM

Truthseeker in Vt.


All financial reports are slanted to emphasize a predetermined point of view , whether it be a balance sheet or P&L. A good accountant can come up with a bewildering array of presentations with nebulous captions , reserve accounts etc.. Pay more attention to your gut feelings about the events behind the numbers, not the numbers themselves. For example, Boeing has a back order for over a 1,000 orders for their dreamliner - thats going to create a huge demand from thousands of suppliers in and out of U.S.. etc, etc. There are a host of other developments - don't waste your time on trying to decipher numbers - you know the old adage , figures can lie and liars can figure. The reports you're reading for directional guidance are almost worthless. Good Luck.

Apr 3, 2012 1:04PM
False market..............​.stocks do not reflect the Dow...........Electi​on propaganda! Vote Obama out of office in 2012!
Apr 3, 2012 11:04AM

I have heard around the news that housing and renovations on homes is hopefully ,expectedly going to be robust this first two quarters(better be) historically speaking it is the busiest two quarters,no news there.


Heads up, this past week a manufacture of Anderson window parts here on   LI NY is going belly up as orders /contracts are done and over with this Co.

 No news of a new sub in site.

Guess the window/renovation/en​ergy efficiency business only works if people can afford homes they live in (NOT) or can use them as bank accounts to fund their spending,thats over.


Add another 900 Peeps to the unemployment line in about 2 months, and another vacant commercial building(75,000 SQFT)


Apr 3, 2012 10:58AM
I've been involved in several buyouts and aquisitions, mostly on a small scale - less than $100 million.  It is pretty much standard that the company being bought almost always does whatever they can to inflate quarterly sales, billable hours, orders, production, etc... in the last couple of months, just to seal the deal.  This is one of the reasons that the forensic accounting field has grown so fast in the last 20 years or so.
Apr 3, 2012 11:06AM

Ignatius75...  I know of at least one idiot calling for more SPENDING, BORROW, TAXING...  Mr. Obama called for just  that in his budget that lost in the house 414-0...   Maybe if  Mr. Obama was calling for 1 trillion in spending cuts,things would not be this bad...


And I know of at least couple of other idiots besides Obama, also calling for more debasement...Bernach​e and Geitner (the tax cheat)... 


So you must be ignoring Obama's constant calls for more spending...,. Most people are....

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