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.

By Charley Blaine Sep 4, 2012 12:49PM
Charley BlaineUpdated: 6:55 p.m. ET

Stocks 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)










 

306Comments
Sep 4, 2012 2:48PM
avatar
No history lesson needed. Just look at socialist Europe - present day. Going down faster than Barney Frank back stage at an Elton John concert. 
Sep 4, 2012 2:45PM
avatar
Did you hear that tax payer money train comming in.
Sep 4, 2012 2:44PM
avatar
History lessons?
It seems Conservatives have forgotten recent history - just  5 years ago.

Sep 4, 2012 2:42PM
Sep 4, 2012 2:41PM
avatar

Why can't the Obama followers not see the light at the end of the tunnel yet?    What is it going to take before you learn that he is wanting and is working on the down fall of America? 

 

OBAMA DNC CONVENTION: ID REQUIRED
 3 TIMES…
Sep 4, 2012 2:40PM
avatar
Do you think it bothers Obumer that Bill Clinton is real leader of the Democratic Party? Obumer needs to take a history lesson From Mr Clinton and move toward the center instead of that sharp left turn he has taken after the mid-term elections. Bill was smart....Obumer not so much.
Sep 4, 2012 2:39PM
avatar
You can thank the party of "NO" for refusing to work on recovery.
All they cared about is making President Obama a one term president.

That's what Mitch McConnell said. That's how much the Republicans care about the middle class.
Nada!
Sep 4, 2012 2:36PM
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House values jump, GM sales skyrocket ... wonderful news
Sep 4, 2012 2:34PM
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just a few weeks ago all was fine headed in good direction all of a sudden not ????????  What happened MITT AN RYAN finally wake up ?????
Sep 4, 2012 2:33PM
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Almost impossible to downgrade something or someone....When there has been NO grade to date.

 

How can we downgrade from a "zero".....Puffery and Chest thumping....No plan.

 

Sep 4, 2012 2:28PM
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DereK......Sorry you missed the gist of the Ode...Better luck next time..
Sep 4, 2012 2:06PM
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Politicians thrive on sound bytes and division. If our country needed a fire to keep warm, one party would build a fire that would consume us. The other party would throw water on the flames and extinguish the fire. First you need to identify what you want to accomplish, then you need to find workable solutions. The #1 issue of the day is jobs and keeping the peoples standard of living. Infrastructure and education are in shambles. In a country where education is supposed to be the great equalizer, you can tell from someone's zip code what type of education they are getting. So Bernanke wants to give banks more money ? Pay them on excess reserves ? Billionaire senior citizens are getting medicare ? Should we only worry about how we cut the pie (important) and not how to make more pie ?
Sep 4, 2012 2:06PM
avatar
I'm torn...  On the one hand, I kinda like Mitt, and on the other, I really like slu7s.
Sep 4, 2012 1:56PM
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ENDEAVOR15 posted:

 

"The Afternoon Adventure of My Dog Mutt Romney

 

This afternoon Mutt and I went for a walk to town to go to the bank.  We got their a little before opening.  We saw a lot of people just milling around outside, waiting to cash their checks.  Some were doing nothing and asking for change.  Mutt acted suspicious towards them and growled under his breath.  I could see that Mutt just shunned them and that he didn't like that they were standing in his way and being such a nuisance.  Doesn't Mutt know that in his journey he will face obstacles that he will need to address at sometime in his life?  Stupid dog."

 

It says a lot about a person when they post making fun of someone else while not grasping basic grammer.

avatar

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.

Sep 4, 2012 1:36PM
avatar

According to Russian News....Moody's has "downgraded" Eurozone to negative...

Such great news.....Thank you Moodys....Please go away.

Sep 4, 2012 1:26PM
avatar
Its funny how wall street says one day its great because the BEN is going to give wall street more WELFARE bailouts for the IDIOTS on wall street! They have no more sound investing principals at all ! Unstable OIL  will never let the World economies recover from the BUSH RECESSION ! The MITT WITTS on this board think that the government i.e OBAMA creates jobs ??? LMFAO !! YO MITT WITTS its the PRIVATE sector that makes jobs ! You all know them ? They are like the MITT WITT himself ! The rich and wall street with their BUSH tax cuts for over a decade ! Remember MITT WITTS > So your man wants more tax cuts for the rich ! Well still looking for all them jobs people ? You think after 10 plus yrs we should have unemployment at 2% by now ! LMFAO And the MITT WITT and the GOP now wants to tell Americans when to retire? And get rid of my MORTGAGE deduction? So we AGAIN give the so called job creators more TAX CUTS ? LMFAO SAME OLE SAME OLE rants ... Only in America land of theh FREE HOME of the stupid mitt witts...
Sep 4, 2012 1:24PM
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When this slide comes it is going to hit hard and fast. Buckle in my friends! When unemployment is this high and growth this weak, you have the perfect storm. I promise you it is coming!!
Sep 4, 2012 1:20PM
avatar

Hail to the great JOB CREATORS:

 

An article today said that employers would rather not hire to bring down the 8.3 unemployment rate, but rather spend their expenses on their current employees. And you still want to blame OBAMA for the high unemployment rate. More republican BS. The party of NO and NO answers and NO truth except the lies they tell themselves to tell the world everyday. Anyone who votes for these folks is a LIAR along with the republican Ponokiyo

Sep 4, 2012 1:17PM
avatar
Romney plan - the part we know so far:
Lower taxes for the wealthy (even more), increase defense spending, push for another war in the middle east..... hmmm, a plan that sounds familiar ...and it failed.
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