Stocks suffer worst weekly loss in 5 months
The major averages see small gains but fall for the week as sparring begins between the White House and House Speaker Boehner on fixing the fiscal cliff. Apple rallies after three big losses. Disney sags. Kayak jumps after merger with Priceline.com.
Updated: 7:38 p.m. ETAfter two nasty days of declines, the stock market struggled to finish ahead today. It succeeded with very small gains, but the major averages still had their worst weekly performance in five months.
If you want to thank someone for at least halting the losses this week, thank consumers, who are more confident about the economy. Thank Apple (AAPL), which rallied today after three straight declines.
Thank Priceline.com (PCLN), which is buying Kayak Software (KYAK), operator of the Kayak travel site, for some $1.8 billion. Kayak shares were up $8.63 to $39.67.
The wild card for the market today has been Washington and the fiscal cliff -- the mixture of government spending cuts and tax hikes set to take effect Jan. 1. Remarks today by President Barack Obama and House Speaker John Boehner suggested there remain big differences in approach. Big enough, in fact, the Dow Jones industrials ($INDU) briefly fell into the red after Obama said a solution to the fiscal cliff had to be balanced -- some tax increases and spending cuts. Boehner opposes any tax increases.
The Dow ultimately finished with a 4-point gain to 12,815. The blue chips had been up as many as 79 points and down as many as 26 after Obama's remarks. The Standard & Poor's 500 Index ($INX) gained 2 points to 1,380, and the Nasdaq Composite Index ($COMPX) gained 9 points to 2,905.
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The Nasdaq-100 Index ($NDX) rose 12 points to 2,584. Apple, which represents about 17% of the market capitalization of the index, rose $9.31 to $547.06. The shares had been as high as $554.88 after falling more than 8% in the past three days.
The Dow's gain would have been more than 20 points higher if Walt Disney (DIS) were flat today. But the entertainment giant's fiscal-fourth-quarter earnings and outlook disappointed Wall Street, and the shares were down $2.98 to $47.06.
Despite today's gains, the Dow and the S&P 500 suffered their third straight weekly losses and fourth in the last five. The Nasdaq had its fifth weekly loss in a row and seventh in the last eight weeks.
The Dow fell 2.1% for the week, while the S&P 500 was off 2.4%, their worst weekly performances since the end of May. The Nasdaq's 2.6% loss was its worst since the week of Oct. 8.
Those losses were modest compared with the 3.2% loss suffered by Japan's Nikkei 225 Index ($JP:N225) or the 2.7% decline for Germany's Dax Index ($DE:DAX).
But the week still left the Dow S&P 500 and Nasdaq below their 200-day moving averages, a bearish sign for markets. But the market is oversold by other measures, with a bounceback rally at the very least due in the near future.
The big risks, of course, are the fiscal cliff and what happens in Europe.
| Markets for the week | ||||||||||||
| 11/9/2012 | 11/2/2012 | % chg. | YTD chg. | |||||||||
| Dow Industrials | 12,815.39 | 13,093.16 | -2.12% | 4.89% | ||||||||
| S&P 500 | 1,379.85 | 1,414.20 | -2.43% | 9.72% | ||||||||
| Nasdaq | 2,904.87 | 2,982.13 | -2.59% | 11.50% | ||||||||
| Russell 2000 | 795.02 | 814.37 | -2.38% | 7.30% | ||||||||
| Crude oil | $86.07 | $84.86 | 1.43% | -12.91% | ||||||||
| (per barrel) | 0.00 | 0.00 | 0.00% | 0.00% | ||||||||
| U.S. Dollar Index | 81.91 | 80.68 | 1.52% | 1.72% | ||||||||
| 10-yr. Treasury | 1.61% | 1.73% | -6.55% | -13.79% | ||||||||
| Gold | $1,730.90 | 1,675.20 | 3.32% | 10.47% | ||||||||
Consumers are feeling better
The Thomson Reuters/University of Michigan’s preliminary index of consumer sentiment for November increased to 84.9 from 82.6 the prior month. Economists had expected a reading of around 83.
The gains were due to lower gasoline prices and an improvement in both housing and labor markets, according to Capital Research, an economic consulting firm.
Capital Research economist Amna Asaf was skeptical the gains in the index would translate into more consumer spendiing. The fiscal cliff will get lots of news play and may weigh on markets.
| Energy prices -- New York close | ||||||||||||
| Fri. | Thur. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $86.07 | $85.09 | -0.20% | -12.91% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $3.0055 | $2.9554 | -1.85% | 3.13% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $3.5030 | $3.6080 | -5.12% | 17.20% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $2.6992 | $2.6073 | 2.62% | 1.57% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $109.40 | $107.25 | 3.52% | 1.88% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.4560 | $3.4640 | -1.85% | 5.49% | ||||||||
| (per gallon; AAA) | ||||||||||||
A busy week ahead
The fiscal cliff will dominate headlines next week as will changes in China's leadership and events in Europe.
But the week will feature reports on producer and consumer price inflation on Wednesday and Thursday and important reports on manufacturing in New York and the mid-Atlantic states, also on Thursday.
Plus, the Federal Reserve releases minutes of its October meeting on Wednesday.
It's a big week for earnings, including:
- Monday: D.R. Horton (DHI) and Jacobs Engineering (JEC).
- Tuesday: Home Depot (HD), Cisco Systems (CSCO), Michael Kors (KORS) and Saks (SKS).
- Wednesday: Abercrombie & Fitch (ANF) and Staples (SPLS).
- Thursday: Wal-Mart Stores (WMT), Ross Stores (ROST), Viacom (VIA) and Gap (GPS).
- Friday: Ann (ANN), Foot Locker (FL) and J.M. Smucker (SJM)
The bad news for J.C. Penney (JCP) keeps getting worse. The struggling department-store chain reported today a wider third-quarter loss than Wall Street expected on a nearly 27% sales drop.
Shares fell $1.05 to $20.64 and are off 52% from their 2012 high, reached on Feb. 9.
Today's was the third consecutive quarter losses and sales declines as customers continue to show that they're unhappy with Penney's decision this year to ditch hundreds of coupons and annual sales in favor of everyday low pricing.
The poor results underscore the challenges facing Penney CEO Ron Johnson, the former Apple executive brought in a year ago to turn the company around. Since then Johnson, who masterminded Apple's popular retail stores, has been working to change everything at Penney's, from its stores to its merchandise.
The problem is it will takes years to get it all changed, and the big question is whether its board of directors will wait long enough for the changes to work.
Late today, Standard & Poor's cut the company's credit ratiing to B- from B+. That's deeper into junk territory.
A broad rally fadesAt one point, all of the 10 sectors in the S&P 500 rose today. That list dropped to six at the close. The leaders were technology, health care and industrial stocks. The laggards were utility, consumer discretionary, materials and energy shares.
Boeing (BA), Caterpillar (CAT) and IBM (IBM) contributed nearly 30 points to the Dow by themselves. Twenty of the 30 Dow stocks were higher.
Meanwhile, 271 S&P 500 stocks were higher, along with 52 Nasdaq-100 stocks.
International Game Technology (IGT), medical-device maker Covidien (COV) and Cliffs Natural Resources (CLF) were the S&P 500 leaders. Disney, J.C. Penney and Microchip Technology (MCHP) were the laggards.
Research In Motion (RIMM) was the Nasdaq-100 leader, followed by Sirius XM Radio (SIRI). The laggards were Microchip Technology and Nvidia (NVDA).
Separately, Groupon (GRPN) was down $1.16 to $2.76. The online deals service posted third-quarter results that showed slowing revenue growth and a decline of its core business.
But Zipcar (ZIP) was up 96 cents to $7. The car-sharing company posted strong third-quarter results and is still on track to report its first annual profit in 2012.
Oil and gold rise
Crude oil (-CL) in New York settled up 98 cents to $86.07 a barrel. Brent crude in London, the bigger determinant in gasoline prices, had risen $1.99 to $109.24 a barrel.
The national average retail price of gasoline was at $3.456 a gallon, down from Thursday's $3.464.
Gold (-GC) had settled up $4.90 to $1,732.70 an ounce. For the week, gold was up 3.3%, its third-largest weekly gain of the year after the weeks of Jan. 23 and May 28.
| Short hits from the markets -- New York close | ||||||||||||
| Fri. | Thur. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.0900% | 0.090% | -18.18% | 800.00% | ||||||||
| 5-year Treasury note | 0.639% | 0.643% | -10.63% | -23.01% | ||||||||
| 10-year Treasury note | 1.613% | 1.632% | -4.33% | -13.79% | ||||||||
| 30-year Treasury bond | 2.752% | 2.769% | -3.47% | -4.74% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 81.098 | 80.886 | 1.39% | 0.72% | ||||||||
| British pound | 1.5901 | 1.5985 | -1.46% | 2.34% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.629 | £0.626 | 1.48% | -2.28% | ||||||||
| Euro in dollars | $1.27 | $1.27 | -1.89% | -1.86% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.786 | € 0.784 | 1.93% | 1.89% | ||||||||
| U.S. $ in yen | 79.62 | 79.48 | -0.23% | 3.26% | ||||||||
| U.S. $ in Chinese | 6.26 | 6.24 | 0.51% | -0.96% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $0.999 | $1.000 | -0.11% | 1.85% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $1.002 | $1.000 | 0.19% | -1.81% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,730.90 | $1,726.000 | 0.69% | 10.47% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $3.446 | $3.470 | -2.05% | 0.28% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $32.5990 | $32.240 | 0.88% | 16.78% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $8.8650 | $9.025 | 2.54% | 35.81% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $7.3875 | $7.413 | -2.25% | 14.27% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $0.6958 | $0.693 | -0.70% | -24.11% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $1.4990 | $1.514 | -3.07% | -34.73% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $86.07 | $85.090 | -0.20% | -12.91% | ||||||||
| (per barrel) | ||||||||||||
Last year China spent $41 billion on acquisitions, up from $143 million in 2002, according to the FT. Since December China has spent $13 billion on acquistions says Bloomberg. It plans on spending much more than that in the coming months. At the end of August, PetroChina announced it was looking for more acquisitions, wanting to cash in on “favorable opportunities.” CNOOC also announced the same at the end of the month.
This is a change of pace for the country. It was giving loans in exchange for oil last year. China made over $45 billion in loans to Russia, Brazil, Venezuela and Kazakhstan. In return it got long term oil contracts.
This was in an article on Business Insider. In short, China is dumping US dollars on everyone else.
Gomo: If the candy bar had been fluctuation between $9 and $10 for the last 2 years..and was back at $9, yes it would be less.
There are a great many things I think are too expensive, but that's the way markets are. I, as a consumer really don't want to pay anything for my goods and services, but when there are scarce resources and production costs/raw materials, prices serve to allocate them.
For a complete list of the new taxes coming our way, you can check them out on atr DOT org / comprehensive-list-tax-hikes-obamacare- a5758 This is some scary stuff.
Individual Mandate Excise Tax(Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following
| 1 Adult | 2 Adults | 3+ Adults |
2014 | 1% AGI/$95 | 1% AGI/$190 | 1% AGI/$285 |
2015 | 2% AGI/$325 | 2% AGI/$650 | 2% AGI/$975 |
2016 + | 2.5% AGI/$695 | 2.5% AGI/$1390 | 2.5% AGI/$2085 |
What countries have dropped the dollar: China, Japan, Kuwait, Syria, Iran,
The "Cliff" is a problem but it is also a cure. It addresses the deficit problem (albeit bluntly) but it begins to accomplish what needs to be done. There seems to be an assumption that if we avoid the Cliff everything will be fine and there will be no pain. Quite to the contrary, some tough decisions have to be made and there will be pain. Some will feel like they went over a cliff regardless of what we do. The question is who those people will be. Place your bets.
The real cliff is on the edge of the hole we dug over the last 30 years.
Let's start from the top:
- The Fed will continue to print money and devaluate the dollar
The dollar isn't getting devalued. Inflation is tame, and the currency is gaining.
- the government isn't going to rein in spending. They haven't the last 20 years, why would they start now? Why would they care? A majority of our politicians are multi-millionaires.
see below
- the US will be downgraded AGAIN. This will make it difficult to pay our loans
If we don't keep spending, then yes we'll be downgraded since Fitch knows that will put us back into a recession. Of course, the last time we were downgraded our interest rates fell..
- taxes will be going up due to Obamacare - roughly $2,000 extra per household as quoted by the CBO
In aggregate maybe, but not each household. A household making 50-75K of earned income won't see their taxes increase due to Obamacare.
- the US dollar will be dropped as the world reserve currency. Not a question of 'if' - it's a matter of 'when'. Don't believe me? Then why have some Middle Eastern countries done it?
Which? Iran after they lost access to US dollars? That has more to do with the embargo Iran has. They can't convert USD into lcoal currency.
- China has been quietly buying up gold and and mining stocks. World analysts say that the only reason for that would be to have their currency backed by a gold standard, i.e. replace the dollar.
Well, they use the Yuan, not the dollar. And if anyone has a reason to keep the dollar in it's place as a reserve currency and not trash our economy and currency purchasing power.. it's China.
OK, it seems to me that a vast majority of Americans are not seeing the 'big picture'. Does anyone have any clue as to what is coming our way like a freight train??
- The Fed will continue to print money and devaluate the dollar. They do not have to answer to our government. They act with impunity and arrogance.
- the government isn't going to rein in spending. They haven't the last 20 years, why would they start now? Why would they care? A majority of our politicians are multi-millionaires.
- the US will be downgraded AGAIN. Moody's has said that they are poised to do so because they doubt that our government will avert the fiscal cliff. This will make it difficult to pay our loans
- taxes will be going up due to Obamacare - roughly $2,000 extra per household as quoted by the CBO
- the US dollar will be dropped as the world reserve currency. Not a question of 'if' - it's a matter of 'when'. Don't believe me? Then why have some Middle Eastern countries done it?
- And speaking of the Middle East, when the dollar is dropped as the world reserve currency, what will oil be priced in? Get ready for gas to double. That will kill our economy.
- China has been quietly buying up gold and and mining stocks. World analysts say that the only reason for that would be to have their currency backed by a gold standard, i.e. replace the dollar.
Does this seem like a 'doom and gloom' prediction that can't possibly happen? Nope. We are on an irreversable path to becoming a Third World Nation.
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