Dow slumps 180 as volatility pays another visit

Updated: 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)