Dow falls 55; FedEx outlook dims
The package shipper says the global slowdown will trim earnings. The blue chips rebound from a 114-point loss. Small-caps lead the bounce, despite a weak report on manufacturing. Netflix shares are hit. Gold settles at a 6-month high; oil falls.
Updated: 6:55 p.m. ETStocks finished lower today after a weaker-than-expected measure of U.S. manufacturing, but the losses were trimmed substantially during the day.
It was a volatile day. The Dow Jones industrials ($INDU) fell as much as 114 points and briefly dropped under the psychologically important 13,000 level. But the blue chips rebounded sharply, trimming their loss to as little as 15 points before dropping to a 55-point loss. The Standard & Poor's 500 Index ($INX) traded below 1,400, perhaps an even more important psychological level for investors, but the index pushed above 1,400 by the close.
The catalyst for the early selling was the Institute for Supply Management's Manufacturing Index for August, which fell to 49.6 from 49.8. But Bill Gross started the market rebound with a single tweet, saying European Central Bank President Mario Draghi's idea of buying short-term European government securities would be reflationary. "Buy gold, TIPS (Treasury inflation-protected securities), real assets," he said.
After the close, FedEx (FDX) shares fell $3.40, or 3.9%, to $84.03, after the package-shipping company cut its fiscal-first quarter guidance because the global economy is slowing more than expected.
The Dow's 55-point loss on the day left the index at 13,036. The S&P 500 was off 2 points to 1,405. Meanwhile, the Nasdaq Composite Index ($COMPX) gained 8 points to 3,075. The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, was down slightly at 2,772. The Russell 2000 Index ($RUT) finished up 10 points to 822.
Article continues below. Apple (AAPL), the biggest influence on the Nasdaq-100, was up $9.73 to $674.97. The company has invited media to a Sept. 12 product announcement. The event is widely expected to unveil a new iPhone, with the device reportedly available nine days later.
Futures trading suggests a flat open on Wednesday.
Why FedEx matters
FedEx and rival United Parcel Service (UPS) are widely followed because investors believe they are terrific leading indicators of business conditions now and going forward.
FedEx was clear about why it was cutting guidance. Earnings for the first-quarter will be lower than expected because "weakness in the global economy constrained revenue growth at FedEx Express more than expected."
FedEx expects earnings of $1.37 to $1.43 a share, compared with $1.46 a year ago and earlier guidance of $1.45 to $1.60 a share. It will report results on Sept. 18.
FedEx shares were off 9 cents to $87.54 in regular trading.
UPS fell $1.71, or 2.3%, to $71.99 after hours. It had fallen 11 cents to $73.70 in regular trading.
Small-caps have a good day
Small-cap stocks enjoyed a solid rally. The Russell 2000 Index is the strongest of the most widely followed indexes. Technology and telecommunications stocks were stronger this afternoon.
And automakers reported better-than-expected sales for August. Ford Motor (F) said sales were up 12.6% from a year ago. General Motors (GM) sales rose 10%. Toyota (TM) sales jumped 40%, but part of the gain was recovery from the effects of the 2011 Japanese earthquake and tsunami.
The industry's seasonally-adjusted sales rate of 14.52 million units for August was its highest of the year, according to market-research firm Autodata. That beat a 14.50 million sales rate in February and the best since August 2009 when the government's "Cash for Clunkers" program was operating.
Markets pass a test
Today was the second time in three sessions that the Dow traded below 13,000 on an intraday basis.
The S&P 500 fell under 1,400 intraday for the third straight day. But the indexes passed the key test for the day, closing above 13,000 and 1,400, respectively.
That could give investors some confidence, especially given the challenges from the domestic and global economies, the U.S. elections and September's recent history as the worst month of the year for stocks.
Crude drops nearly to $95; gold at a 6-month high
Crude oil (-CL) settled at $95.30 a barrel in New York, down $1.17 from Friday. Brent crude in London was trading at $114.26 a barrel, down $1.52 from Monday.
The national average price of gasoline was $3.824 a gallon, down from Monday's $3.827, according to AAA's Daily Fuel Gauge Report.
Gold ( -GC) settled up $8.40 to $1,696 -- its highest close since March 12.
| Energy prices -- New York close | ||||||||||||
| Tues. | Fri. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $95.30 | $96.47 | -1.21% | -3.57% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $3.1468 | $3.1802 | -1.05% | 7.98% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $2.8540 | $2.7990 | 1.96% | -4.52% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $2.9522 | $2.9728 | -0.69% | 11.09% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $114.18 | $115.78 | -0.34% | 6.33% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.8240 | $3.8270 | -0.13% | 16.73% | ||||||||
| (per gallon; AAA) | ||||||||||||
| U.S. markets were closed Monday for the Labor Day holiday. | ||||||||||||
Facebook slumps again
Facebook (FB) shares tumbled to a new intraday low of $17.55 today before closing at $17.73, off 33 cents. It was Facebook's first close below $18.
The selling came after Morgan Stanley, one of the lead underwriters of the company’s initial public offering, cut its price forecast on concern that the social network is struggling to reach mobile users with ads.
As more users access Facebook’s site over smartphones and tablets, they’re exposed to fewer ads, Morgan Stanley analyst Scott Devitt said in a note to clients today. Facebook’s desktop site shows about 30 times more ads per user each day than its mobile counterpart, he said.
The shares are now down 53% from the IPO price of $38 and 61% from the $45 intraday high set on May 19, the first day of trading. Richard Ross of Auerbach Grayson told CNBC the stock could go to $10. He would not buy the stock unless it moved decisively above its 20-day moving average, currently around $20.
The ISM offers a weak view on manufacturing
The Institute for Supply Management’s U.S. factory index dropped to 49.6 in August from 49.8 a month earlier. Economists had expected an August reading of 50, which is the dividing line between expansion and contraction. A report over the weekend showed China’s manufacturing contracted at the fastest pace since March 2009.
New orders and production were lower. Costs were higher, probably reflecting the drought-related jump in grain prices as well as higher oil prices. Meanwhile, a report on construction spending also disappointed.
European leaders were meeting in Rome and Berlin today, two days before the European Central Bank holds its policy meeting.
ECB President Mario Draghi is due to distribute his bond-purchasing plan to national banks after he was said to tell officials he would be comfortable buying three-year government bonds to help troubled European governments cut their borrowing costs.
European markets were lower in part because the Swiss economy unexpectedly shrank in the second quarter. The report showed the eurozone crisis has caught up with a country that had seemed relatively immune to its neighbors' woes, providing further justification for the central bank's cap on the strong franc.
The surprise 0.1% contraction mirrors emerging evidence in Sweden, another euro outsider whose currency is attracting unwelcome strength, that the euro bloc's problems are beginning to hurt previously resilient neighbors.
"What people saw with today's U.S. ISM and the manufacturing data in Asia and Europe yesterday is that the global economy is still slowing down," Peter Boockvar, equity strategist at Miller Tabak & Co., told Reuters.
This is a big week for economic reports, ending Friday with the Labor Department's report on payroll employment and unemployment.
The weakness of the economic reports may give the Federal Reserve room to try another round of bond purchases to support the economy. The Fed's Federal Open Market Committee meets next week and will announce the results on Sept. 13.
Netflix takes one on the chin
Netflix (NFLX), down $3.79 to $55.93, was the biggest loser among Nasdaq-100 stocks and second-worst performer among S&P 500 stocks.
The stock slumped after Amazon.com (AMZN) said it signed a multiyear licensing deal in the U.S. with Epix, a cable channel, to bring blockbuster superhero movies including "The Avengers" and thousands of other titles to Amazon's streaming video service.
Epix's exclusive streaming agreement with Netflix recently ended.
Amazon.com was down 39 cents to $247.88. The shares were up 6.4% in August.
A bias to the downside
The rebound off the day's lows did not erase the market's negative tone today.
Only 11 of the 30 Dow stocks were higher today, led by Verizon Communications (VZ) and Wal-Mart Stores (WMT). The laggards were Caterpillar (CAT) and DuPont (DD), both of which do sizable amounts of business outside the United States.
Meanwhile, 244 S&P 500 stocks were led by Gamestop (GME) and Tripadvisor (TRIP). The laggards were Alpha Natural Resources and Netflix.
Lastly, 47 Nasdaq-100 stocks were higher, led by pharmaceutical company Warner Chilcott (WCRX) and Chinese Internet portal Baidu (BIDU). The laggards were Netflix and Nvidia (NVDA).
| Short hits from the markets -- New York close | ||||||||||||
| Tues. | Fri. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.0900% | 0.090% | 0.00% | 800.00% | ||||||||
| 5-year Treasury note | 0.622% | 0.596% | 4.36% | -25.06% | ||||||||
| 10-year Treasury note | 1.581% | 1.562% | 1.22% | -15.50% | ||||||||
| 30-year Treasury bond | 2.689% | 2.684% | 0.19% | -6.92% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 81.316 | 81.216 | 0.12% | 0.99% | ||||||||
| British pound | 1.5886 | 1.5891 | -0.02% | 2.24% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.629 | £0.629 | 0.02% | -2.19% | ||||||||
| Euro in dollars | $1.26 | $1.26 | -0.18% | -2.95% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.795 | € 0.794 | 0.18% | 3.04% | ||||||||
| U.S. $ in yen | 78.55 | 78.29 | 0.08% | 1.89% | ||||||||
| U.S. $ in Chinese | 6.37 | 6.34 | 0.08% | 0.68% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $1.015 | $1.015 | 0.07% | 3.45% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $0.986 | $0.985 | -0.07% | -3.34% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,696.00 | $1,687.60 | 0.50% | 8.25% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $3.469 | $3.457 | 0.35% | 0.96% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $32.4110 | $31.4420 | 3.08% | 16.11% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $8.8875 | $8.8950 | -0.08% | 36.15% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $8.0500 | $7.998 | 0.66% | 24.52% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $0.7568 | 0.7726 | -2.05% | -17.45% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $1.6530 | 1.6475 | 0.33% | -28.02% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $95.30 | $96.47 | -1.21% | -3.57% | ||||||||
| (per barrel) | ||||||||||||
New manufacturing orders down for 3 straight months - plus construction spending down.
THIS IS THE PROBLEM - All I hear is X number of new jobs each month. I want to know the real facts - ie:
1. number of full time jobs with benefits
2. # of part time jobs with no benefits
3. # of contract workers hired and hours being worked
4. # of people who are now employed who are making 20% or more less than previous job.
I AM FORTUNATE MY FATHER TAUGHT ME TO BE FRUGAL AND NOT HAVE MUCH DEBT. Out of work 3 years and never missed a house payment
I fall into category (3) contract worker, 20 hours a week. A contract worker, pays both the employer and employee parts of Social Security and Medicare. Currently this total 7.65% employer side plus 5.65% employee side or a total of 13.30% It is not withheld, so I have to pay quarterly estimates. I must save this from each paycheck plus the income tax due.
As of January 1, 2013 the employee side returns to 7.65% from the current 5.65%. So everyone who gets a paycheck will get less money starting January 1, 2013.
So - 1. I am making less than half of what I made over 3 years ago ( out of work 3 years).
2. I have no benefits (no health insurance)
3. As a contract employee - I am paying 7.65% more in taxes than if I was an employee
4. As a contract worker I am ineligible to get unemployment if let go.
I know of many people in my same state. I am happy for my current 20 hours a week - but I sure have different wants and needs, as I have for over 3 years. Until we get real FULL TIME JOB GROWTH, WITH BENEFITS, and people feel good about the jobs they have our economy will be anemic at best.
As a country we are satisfied with products from China made with LEAD PAINT, child labor, no OSHA , new coal fired plants built every 6 weeks in China, ETC!
PROUDLY MADE IN AMERICA !!! When will we see this again?
Japan is in a depression
Europe is in a depression
USA is in a depression
All the monies that Bernanke and Japanese and European cnetral banks can print will not save any of their economies.
Pretty much we are starting to hit the light at the end of the tunnel and it is a high speed freight train headed our way.
Oil is about ready to jump sky as Israel is going to attack Iran soon -- pretty much Iran already has nuclear bombs so Israel is going to have to teach them a lession. If you have 20 percent reactor fuel rods you can make a nuclear weapon by compressing the fuel rods five times with C4 and create 120 percent U235 and you only need about 95 percent for a bomb.
The Russians sold Iran much more 20 percent fuel rods than they needed for their reactor. About ten bombs worth.
President Obama greeted the king of Saudi Arabia with a full bow from the waist yesterday, a move one commentator described as a violation of protocol and not worthy of the office he holds.
With an entourage of 500 staff, an armour-plated limousine and a fleet of decoy helicopters, America's new president will arrive for his first visit to Britain amid huge razzmatazz on Tuesday for the G20 summit. But it will be his closed-door meetings with world leaders that are likely to prove the most significant of the trip
AMERICA NEEDS OBAMA FOR FOUR MORE YEARS LIKE IT NEEDS THE PLAGUE
Probably the two most important issues on people's minds, leading up to the elections, are the economy and jobs. As of the end of June, President Barack Obama had been to 104 fundraisers, but hadn't met with his jobs council once in that time. The White House said it was not a big deal.
Remember when Obama went to John Boehner's home state and pointed to a bridge, and said help us rebuild it? Well, the good news is we're either building or rebuilding three new bridges in the country. The bad news is we're using Chinese contractors, and Chinese crews to do it. When interviewed about the new bridge in California, the man in charge said they went with the Chinese because they could do it faster and cheaper.
This report was not on Fox; it was done by Diane Sawyer on ABC, and she couldn't believe it.
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