Dow slumps 180 as volatility pays another visit

Investors are freaked when copper tumbles, boosting worries about the global economy's health. Fears about Europe's debt persist. Jabil Circuit's a winner; Darden Restaurants is not.

By Charley Blaine Sep 28, 2011 1:09PM
Charley BlaineUpdated: 8:41 p.m. ET

Stocks stumbled badly in late afternoon trading, wiping out all of Tuesday's gains.

Much of the selling was due to profit-taking  after three days of gains. There were the continuing worries about Europe. Plus, China's benchmark Shanghai Composite Index hit a new low for 2011, and CNBC's Bob Pisano suggested this is a signal that the country's economy is slowing. And the price of copper (-HG) plunged, suggesting the global economy also is stumbling.

As a result, the big volatility that has characterized the market since the latter half of June erupted again. The Dow Jones industrials ($INDU) jumped to a 126-point gain in the first 20 minutes of trading and closed down 180 points, or 1.6%, to 11,011.

With two days left in September, the Dow has closed up or down 100 points or more in a day 29 times in 41 trading days starting on Aug. 1. There were only 12 such days in August and September of 2010.

In addition, to the Dow's plunge, the Standard & Poor's 500 Index ($INX) was down 24 points, or 2.1%, to 1,151, and the Nasdaq Composite Index ($COMPX) was off 55 points, or 2.2%, to 2,492.

Article continues below.
Much of the selling reflected the continuing worries about Greece's finances and their threat to the solvency of many of Europe's big banks.

The fear is that Greece will default on its debt in a way that does not allow the banks time to figure out how to withstand the shock. And that will set off a chain reaction of problems across the continent and the world. The midmorning pullback affected European stocks, which closed lower today.

In addition, extensions of short-selling bans in Spain and Italy seemed to accelerate a budding sell-off in riskier assets.

Copper's 5.5% decline to $3.25 a pound bothered many traders because it suggests a slowing global economy, particularly in China. Copper is down 24% this quarter and 26% for the year. Mining stocks slumped as a result: Freeport-McMoRan Copper & Gold (FCX) fell 7.2% to $32.30, near its 52-week low of $30.97.

The Shanghai Composite Index finished down 23 points to 2,392, its lowest level since April 9, 2009. The index is down 14.8% this year and 24.8% since a peak on Nov. 8.

Futures trading suggests a modestly lower open for U.S. stocks. A vote by Germany's parliament on contributing more to the European Financial Stability Facility (EFSF), the region's bailout fund, a revision of second-quarter U.S. gross domestic product and the weekly U.S. report on jobless claims are the big events of the day.

Micron Technology (MU) reports after the close.

Amazon's new tablet impresses the Street
The market sell-off pulled down the Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks. The index was down 33 points, or 1.5%, to 2,221. The index had risen at the open on investor interest in Amazon.com (AMZN), which unveiled its new Kindle Fire tablet device and a new Wi-Fi version of is Kindle reader, the Kindle Touch. Shares were up 2.5% to $229.71.

Rival Apple (AAPL) was off 0.6% to $397.01. Barnes & Noble (BKS), whose Nook reader competes against the Kindle, was down 6.9% to $12.30.

To be sure, the sell-off was to be expected after a jittery market enjoyed three days of gains. The Dow gained 458 points between Friday and Tuesday.

Energy prices -- New York close



Wednesday

Tuesday

Month chg.

YTD chg.
Crude oil (-CL)

$81.21

$84.45

-8.56%

-11.13%
(per barrel)











Heating oil (-HO)

$2.8271

$2.8857

-8.33%

11.14%
(per gallon)











Natural gas (-NG)

$3.7990

$3.8750

-6.29%

-13.76%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.5753

$2.6360

-10.46%

4.98%
(per gallon)











Brent crude 

$103.81

$107.14

-9.61%

9.56%
(per barrel)











Retail gasoline

$3.4650

$3.4790

-4.20%

12.79%
(per gallon; AAA)












Commodities fall as dollar rises
The worries about Europe pushed the dollar higher against the euro and other currencies. That, in turn, pushed gold (-GC), silver (-SI),  copper and crude oil (-CL), lower.

Gold settled down $34.40 to $1,618.10 an ounce in New York and was lower after hours in electronic trading. Copper settled down 19.3 cents to $3.2465 a pound and was trading below $3.20 after hours. Silver settled at $30.134 an ounce and was at $29.70 an ounce in electronic trading.

Crude oil settled down $3.24 to $81.21 a barrel. Brent crude was off $3.56 to $103.58 a barrel. Crude is off 8.6% this month and down 11.1% for the year. Brent is off 9.8% for September but up 9.3% for the year.

As stocks fell, bond prices rose, and interest rates fell back. The 10-year Treasury yield was at 2.002%, down from Tuesday's 2.16% and Friday's 1.808%.

Materials and energy shares were lower. In addition to Freeport-McMoRan's decline, Southern Copper (SCCO) fell 7.1% to $26.06. U.S. Steel (X) was off 5.9% to $22.47. Alcoa (AA) dropped 4.9% to $9.97.

Movement on a Greek rescue
There was some progress on Greece, although the ultimate question is whether the cure  -- higher taxes, lower government spending -- will be worse than simply letting Greece give up on the euro.

On Tuesday, Greece's parliament approved a new property tax that was considered crucial for the debt-laden country to get its next bailout installment.
 
Finland's parliament approved changes to the EFSF, a day after Slovenia gave its OK. However, all 17 members of the eurozone must agree to the changes. There have been calls for private debt-holders to take deeper writedowns on their holdings of Greek bonds. Germany is scheduled to vote on Thursday.

Some good news on the economy
Contributing to uncertainty today was another sign of weakness in the U.S. economy. The Commerce Department said durable-goods orders dipped 0.1% in August. Economists had expected a gain of 0.2%. Orders, excluding transportation, also fell by 0.1%. August's declines compare to growth of 4.1% and 0.7%, respectively, in June and July.


That was the bad news. The good news, Bloomberg News noted, was that bookings for goods like computers and communications gear, excluding military hardware and aircraft, climbed 1.1%. That was the most since May. 


Manufacturers like General Electric (GE) continue to benefit from sales to China, India and other emerging markets even as they face a slowdown in domestic spending. Gains in business investment in the U.S. indicate companies are looking beyond the plunge in stocks and concern over the European debt crisis and are seeking to expand. 

 

Leaders and laggards

Payroll provider Paychex (PAYX) reported fiscal-first-quarter earnings of 41 cents a share, beating the average analyst estimate of 38 cents. Shares rose 0.9% to $26.92. 


Darden Restaurants (DRI) shares were off 5.7% to $44.30. The operator of the Olive Garden, Red Lobster and LongHorn Steakhouse restaurant chains said customer counts were less than expected at Olive Gardens. Plus, there was "a search for affordability" at all restaurants. Translation: Customers held back on drinks, desserts and appetizers. The company's results were also hurt by Hurricane Irene.
 

Shares of circuit-board maker Jabil Circuit (JBL) jumped 8.4% to $18.84. The company forecast fiscal-first-quarter earnings of 62 to 70 cents a share on revenue of $4.3 billion to $4.5 billion. Analysts had been expecting 61 cents in earnings on revenue of $4.41 billion. In its fiscal fourth quarter, Jabil earned 62 cents a share, after one-time charges, better than the Street estimate of 56 cents. Revenue was $4.28 billion, better than the consensus estimate of $4.19 billion.

 

First Solar (FSLR) fell 10.4% to $64.75 and was the biggest loser among S&P 500 stocks. The world’s largest maker of thin-film solar modules had its share-price estimate reduced to $55 from $88 by Cantor Fitzgerald, which cited lower solar prices.


A heavy bias to the downside

All 30 Dow stocks were lower on the day. IBM (IBM) was the top performer, down 0.1% to $177.55. Bank of America (BAC) was the laggard, down 4.9% to $6.16.


Only 13 S&P 500 stocks were higher, led by Jabil Circuit and Amazon.com. Coal producer Alpha Natural Resources (ANR) and First Solar were the laggards.


Only nine Nasdaq-100 stocks were higher, led by Amazon.com and Dollar Tree (DLTR), which was up 1.1% to $76.56. First Solar was the laggard.


Only one of the 20 stocks in the Dow Jones Transportation Average ($DJT) showed gains: United Continental Holdings (UAL), the parent of United Airlines and Continental Airlines, up 1.6% to $20.76.


All of the stocks in the Philadelphia Semiconductor Index ($SOX) and the KBW Bank Index ($BKX) were lower. The indexes were down 2.9% to 355 and 3.5% to 36, respectively.


Short hits from the markets -- New York close



Wednesday

Tuesday

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0100%

0.010%

0.00%

-91.67%
5-year Treasury note 

0.958%

0.971%

0.63%

-52.48%
10-year Treasury note

2.002%

2.016%

-9.74%

-39.43%
30-year Treasury bond

3.092%

3.116%

-13.92%

-29.12%
Currencies











U.S. Dollar Index

78.429

78.028

5.74%

-1.08%
British pound

1.5610

1.5637

-3.95%

0.03%
(in U.S. $)











U.S. $ in pounds

£0.641

£0.640

4.11%

-0.03%
Euro in dollars

$1.36

$1.36

-5.64%

1.40%
(in U.S. $)











U.S. $ in euros

€ 0.737

€ 0.736

5.98%

-1.38%
U.S. $ in yen 

76.63

76.74

-0.15%

-5.82%
U.S. $ in Chinese

6.42

6.40

0.24%

-3.02%
yuan











Canada dollar

$0.970

$0.981

-5.08%

-3.33%
(in U.S. $)











U.S. dollar 

$1.032

$1.019

5.35%

3.45%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,618.10

$1,652.50

-11.66%

13.84%
(per troy ounce)











Copper (-HG)

$3.2465

$3.4395

-22.79%

-27.00%
(per pound)











Silver (-SI)

$30.134

$31.536

-27.85%

-2.60%
(per troy ounce)











Wheat (-ZW)

$6.3875

$6.5825

-19.30%

-19.58%
(per bushel)











Corn (-ZC)

$6.3075

6.5225

-18.16%

1.33%
(per bushel)











Cotton 

$0.9953

1.0015

-5.94%

-31.27%
(per pound)











Coffee

$2.3350

2.4085

-18.99%

-2.91%
(per pound)











Crude oil (-CL)

$81.21

$84.45

-8.56%

-11.13%
(per barrel)










 
66Comments
Sep 28, 2011 2:09PM
avatar
I am tending to believe that the financial markets are nothing more than BS!.  Yesterday, the markets were up big, until 3pm. All the "so-called" analysts were reporting that  things in Europe were looking a bit better, not great, but a little glimmer of hope. So, how do these "so-called" analysts explain today?. Reports are that stock are slipping due to the Euro and worries over Greece, while yesterdays reports showed some hope in Greece!. No, it all seems to be BS, and traders are suckers for BS!.  
Sep 28, 2011 4:24PM
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For the record our elected politicians from BOTH parties are theives.  They have voted themselves lavish benefits (not to mention separated their retirement plan from Social Security) and have us, the taxpayers, footing the bill.  We should use direct democracy for any Presidential, Cabinet or Congress raises.  The entire nation would have to approve any increases.  No more of this voting yourselves giant raises.  Who among the rest of us would not want to vote their own raise, but that is not the way it works for us and it should not work for them either.  They supposedly "work" for us!!
Sep 28, 2011 4:46PM
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Lets give it a rest.

1.  Bush tax cuts were extended in Dec 2010 when the Dems still controlled WH, Senate and House. SO if you want to blame someone for extending the tax cuts past the original expiration date.  It was Obama, Polsi and Reed,
 
2.  When the Dems had filibuster proof majorities in both the house and the senate, (Jan 2009 - Jan 2010) they could have fixed all the real and imaginary problems with the banking system, tariffs, etc. exactly the way they wanted too .... but chose not too.  They couldn't even pass a budget in 2010.

 

avatar
We'd like to work too. Trouble is, NAFTA and American corporate leaders have sent most of our manufacturing sector, and the associated jobs, to China.

Our misinformed leaders think free trade is a good thing. It was created by Prince Albert the husband of Queen Victoria to keep Britain's manufacturing base secure. You see it works this way you need raw materials from undeveloped nations and you need them as a dumping grounds for your manufactured goods. 

Free trade keeps the locals from developing their own industry as your goods are much cheaper as there is no development costs. The locals can not put a tariff on your goods to make their local goods competitive. It also ensures low cost raw materials that have no export tariffs on them. A win win for the manufacturing country.

SO WHY ARE OUR LEADERS SAYING FREE TRADE IS GOOD WHEN ALL IT DOES IS HELP CHINA??? 

Free trade hurts the US.



Sep 28, 2011 2:37PM
avatar
We need only look at ourselves if we want to play the "Blame Game".  This has been a multi-year slide and we bought into the land of "milk and honey" where just by being a citizen automatically qualitied eveyone for entitlements and high paying jobs without realizing the negative effects and the effort it took to keep it there.  Yeah our government and their lack of knowledge of business (hell, they don't have a clue as to what their constituancy wants or needs, they just vote the party line, to much pure politics by the career poiiticians), the corporations and their greed, not for their stockholders, rather for the CEO's, hell our Professional Athletes and Entertainers and their greed for mega contracts to play, wow wouldn't we all love to make millions doing what we would do for free anyway, but also our greed through the labor unions that have now become so corrupt due to the large money to be made from them and what drove the labor prices to the point that manufacturing had to move to survive, where would prices be if everyone made $50 an hour?  thank god for the immigrant laborers, if not for them we'd be paying $20 a lb for chicken and fruit.  When times were good, we wanted better, I guess we are now getting what we asked for.  Just a common sense way of looking at it, you know, opinions are like rearends, everyone's got one. 
Sep 28, 2011 4:26PM
avatar
Hey Currency Trader, shut your piehole you moron. Your kind is why we are in this mess not because of Bush.  Look at the FACTS going back to CRA Amendment which allowed securitzation opf subprime product coupled with removing Glass Steigal; that was the problem.  It was both dems and repubs from the legislature that caused this.  Get you feelings out of it and look at the facts Jack. Now we need to get out of this mess, not point fingers and say "well he did it".  I really don't care who did what when where or how - we are here, right now, in this position, let's fix it.
Sep 28, 2011 3:16PM
avatar
Someone tell me, if high labor cost force business over seas then why is Germany the second largest exporter in the world when they have high labor, high taxes, high benefits and a plus trade balance?
Sep 28, 2011 5:49PM
avatar

   In the only year I know about the Saudi royal family made 250 billion on our rigged market. The Emir of Kuwait has hundreds of billions in that same. We spend billions defending these two that run their countries like company stores.

   Our big banks with trillions in assets have been getting billions in 0% loans to play the market. Everyone knows these giant leeches have been driving up the price of gas by manipulating the commodities market.

   Our economy is doom for depression if we don't demand real change. Hopefully our young protesters will be the starter of a wider demand for fairness and sanity.

Sep 28, 2011 5:37PM
avatar
Why is gold way over priced?What will be the next money, digital currency like bitcoins? I agree, screw my 401k I want the money now to buy guns, ammo, land with water.

Banks are greedy, the government is a mess the stock market is manipulated, seems like one big sham.
Sep 28, 2011 3:24PM
avatar

Max Spartacus asks: "Why is Germany....?"

 

Germany supports protective tariffs for its markets. They may have lost two world wars in a row but they've learned something in the process. German corporate leaders are held to a rigid set of laws. Those who try to sell the nation to foreign interests usually wind up in jail.

Sep 28, 2011 5:48PM
avatar

It has gotten totally out of control, buy early in the morning with all the working peoples 401k money and watch the market go up but at the end of the day all the profit takers are draining the market taking the profits and driving the market back down for tomorrows same strategy.  How can we make any money in a situation like this.    You can not tell me that the government has not figured this out,  they are part of the problem.  The people need to stand up and say enough is enough.   Term limits  for all elected officials and more accountabilty with the market or shut it down and see if these big publicly owned companies can survive.  Sometimes smaller is better.

Sep 28, 2011 3:52PM
avatar
Rally stalls because investors realize that nothing has or will fundamentally change until the do-nothing President and do-nothing Congress is put into permanent retirement.  Or maybe they see another "entitlement Europe" taking place in the USA. Or maybe they realize that until jobs are created, consumer spending will be modest.  If you ain't got a job, you can't buy a house (at least not anymore!)
Sep 28, 2011 5:28PM
avatar
For one Gold is WAY over priced. Commodities all took a hit. Then there's  mutiny over seas with the EU melt down.  Your either are brave or crazy to think your 401k is going anywhere. Only billionaires with inside info make money in times like this.  I put all my 401k into a Roth savings fund in "09" got out a little early. Guess what folks? I have not lost more then $45.00 in the last three years.  The need to get rid of the IMF and the FED are never so apparent has the times are telling us now. Bailing out IDIOT BANKS that are to big to fail will be the end of money has we know it.  Why should banks worry, they are not going to prison for ripping off people. The vault is open and they are walking out with shopping carts full of our cash.
Sep 28, 2011 1:53PM
avatar

Aaron

 

We'd like to work too. Trouble is, NAFTA and American corporate leaders have sent most of our manufacturing sector, and the associated jobs, to China.

Sep 28, 2011 3:25PM
avatar
Scooby67,...YES,...and we need to demand all that money back from Germany, France, etc. before we send another cent to the Euro Zone,...we can have an extremely strong defense, without defending Europe as well,...they need to foot that bill too,...if we're to stay over there with our troops and equipment---we need to demand that we are compensated fully for the cost.
Sep 28, 2011 9:31PM
avatar
I will check out the book, "End of Growth". From the short description I read it sounds like a good compliment to Chris Martenson's "Crash Course" videos. The whole growth idea I find fundamentally flawed. I work for in grocery retail and corporate wants sales to grow every year or the budget fails. It is not logical, you can't have growth indefinitely, the math doesn't add up. 
Sep 28, 2011 4:40PM
avatar
I see no reason to stay in the market with this amount of manipulation even in commodity ETFs.  Notice how Wall Street runs up gold or silver only to lower the boom clearing out the small investors but buying at a lower price they forced?  Until I see serious bank and market reforms with many of these hucksters going to prison then the market is nothing but a big casino ( where us small investors lose every hand ) and isn't  based on fundamentals.
Sep 28, 2011 2:44PM
avatar

Suppose that we consider for a moment that group of unpatriotic Americans who put their own personal greed far ahead of the nation's health, and suppose we also consider the group who represent most of our corporate leadership...  Ah, but I repeat myself.

 

There are plenty of good American jobs out there...  Most of them are in China.

Sep 28, 2011 7:14PM
avatar

Alpeena Bob wrote: " It's twice the size of my house and sold for $289,000.00 back in 2006. The lady that bought it died and her kids could not make the monthly payment - so the house went into foreclosure and sat vacant for 18 months. The pipes froze during the winter and burst doing a lot of damage. A family bought it 5 months ago for $ 47,000.00 and have been working on it ever since. The bank took a $200,000.00 loss. "

So what happened to the kids after their mom died? Couldn't the bank have squeezed $47,000.00 out of them? Or did the house go to the sponsor of some loan officer -- after a suitable remuneration?

Sep 28, 2011 5:09PM
avatar
Is it just me, or has anyone else noticed that Democrats love quoting Jefferson when if comes to separation of church and state, but rarely on anything else? Every time we hear separation of church and state we should retort with "A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take the mouth of labor the bread it has earned - this is the sum of good government". That should win the bar bet every time!
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