Dow off 243 as earnings woes slam stocks

Disappointing results from 3M, DuPont and United Technologies set off broad selling. Downgrades of Spanish regions hit European stocks. Apple falls despite its new iPad. Facebook results cheer; Netflix do not. Oil falls below $87.

By Charley Blaine Oct 23, 2012 12:04PM
Charley BlaineUpdated: 9:25 p.m. ET

Stocks slumped today as more companies reported lower-than-expected revenue and cut earnings guidance. The drubbing sent the Dow Jones industrials ($INDU) to its second loss of more than 200 points in three sessions and set off worries that the pullback is a signal of a weakening economy ahead.

The Nasdaq Composite Index ($COMPX) closed below 3,000 for the first time since Aug. 6. Apple (AAPL) shares slid after the company announced its new iPad Mini tablet device would be priced at $329. Many investors were hoping for a $299 price, arguing it would sell better at a lower price.

After the close, Facebook (FB) shares jumped $1.98, or 10.2%, to $21.13 after reporting that earnings of 12 cents a share after one-time expenses beat the Street estimate by a penny. Revenue of $1.26 billion was up 32% from a year ago and beat the Street estimate by $30 million. Shares were up 18 cents to $19.50 in regular trading.

But Netflix (NFLX) shares were down $11.22, or 16.3%, to $57.12 after hours as results from its video streaming business weren't as strong as expected and the company starts to produce original programming. Earnings fell to 13 cents a share from $1.16 a year ago. The company may see a fourth-quarter loss.

The Dow closed down 243 points to 13,103. The blue chips had been down as many as 263 points. The Standard & Poor's 500 Index ($INX) was off 21 points to 1,413. The Nasdaq dropped 27 points to 2,990.

Article continues below.
The Nasdaq-100 Index ($NDX) fell 29 points to 2,666. Apple was down $20.67 to $613.36.

Also after the close, Panera Bread (PNRA) shares jumped $8.91, or 5.6%, to $169.25.
The company's third-quarter revenue and earnings beat estimates, and the company raised its earnings guidance to $1.72 to $1.74 a share for the fourth quarter, up from 41.60 to $1.70.

The worst Dow loss since June
The Dow's loss was its worst since June 21, and it was the first time since late November 2011 there were two 200-point losses in three days. (The S&P and Nasdaq had larger losses on Friday.)

How much more the market will drop is not clear. The S&P 500 has broken below its trend line since the June 4 market bottom, a bearish signal. The Nasdaq came close to -- but did not drop below -- its 200-day moving average of 2,970, suggesting there is buyer support at that level.

At the same time, forces are building within the market that could stabilize matters, assuming the economy cooperates. The relative strength indexes for the Dow and S&P 500 are nearing 30. The Nasdaq's RSI was at 27 today. The index measures the current price against results over a set period of time, in this case, over 14 sessions. A reading below 30 suggests an index or security is oversold. (Apple's RSI was 31.84.)

The market opened badly from weaker-than-expected results from industrial giants 3M (MMM), DuPont (DD) and United Technologies (UTX).

At the same time, European stocks fell, with German and French stocks dropping more than 2% after Moody's downgraded credit ratings for regions in Spain. The stress in Europe set off a rally in the dollar and hit commodities.

Wednesday brings earnings from AT&T (T), Boeing (BA), Eli Lilly (LLY) and game-maker Zynga (ZNGA), among others. Zynga results will likely be weak. The company is cutting 5% of its work force.

The government reports on new-home sales and oil inventories. The Federal Reserve will make a policy announcement at 2:15 p.m.

A slump on commodity prices
Crude oil (-CL) in New York dropped to $86.67 a barrel, down $1.98, its lowest settlement price since July 12. Brent crude was off $1.11 to $108.33 a barrel after falling to as low as $107.31.

Pump prices were lower. The national average retail price of gasoline was $3.648 a gallon, according to AAA's Daily Fuel Gauge Report, down from Monday's $3.665 a gallon and down 4% this month alone.

Gold (-GC) settled down $16.90 to $1,710.20 an ounce.

The dollar's rise meant interest rates were lower. The 10-year Treasury yield was down to 1.764% from Monday's 1.798%.

Energy prices -- New York close



Tues.     Mon.

Month chg.

YTD chg.
Crude oil (-CL)

$86.67

$88.65

-5.99%

-12.30%
(per barrel)











Heating oil (-HO)

$3.0308

$3.0668

-4.06%

4.00%
(per gallon)











Natural gas (-NG)

$3.5350

$3.4520

6.48%

18.27%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.6050

$2.6348

-10.79%

-1.97%
(per gallon)











Brent crude 

$108.33

$109.44

-1.64%

0.88%
(per barrel)











Retail gasoline

$3.6480

$3.6650

-3.67%

11.36%
(per gallon; AAA)












DuPont reports a profit fall, will lay off 1,500
DuPont reported a lower-than-expected quarterly profit and announced 1,500 job cuts to offset falling sales around the world. The news was a shock to investors, and shares tumbled $4.51 to $45.25 and pulled the materials sector of the S&P 500 nearly 3% lower. It was the worst-performer among the 30 Dow stocks and second-worst among S&P 500 stocks.

United Technologies reported a 3.3% decline in third-quarter earnings and cut its sales forecast for the year, citing weak demand from airlines and an uncertain economy. The report sent shares 76 cents lower to $77.07.

3M lost $3.80 to $88.73 after the diversified U.S. manufacturer cut its profit forecast for the full year as acquisition costs and a strengthening dollar during the quarter hurt margins. 3M generates more than 60% of its revenue outside the United States.

The three companies accounted for nearly 70 points of the decline on the Dow industrials. Declines in Chevron (CVX) and Exxon Mobil (XOM) -- because of falling oil prices -- contributed an additional 41 points to the Dow's loss.

Whirlpool (WHR) jumped $7.50 to $93.81 after reporting a higher-than-expected quarterly profit, helped by price increases and tight cost controls. The world's largest appliance maker also raised its earnings outlook for the year.

Yahoo (YHOO) shares were up 90 cents to $16.67. Chief Executive Marissa Mayer’s first earnings call appearance reignited Street interest in the beleaguered Web portal’s future. The company got a lift from its sale of Alibaba shares, but, to the surprise of some analysts, Yahoo’s core business also performed better than expected.

The Fed meets; Bernanke speculation builds
The Federal Reserve's policy committee is scheduled to begin a two-day meeting on interest rates on Tuesday. The Federal Open Market Committee is likely to hold off from taking new action, opting instead to review the impact of last month's easing of credit while keeping a low profile in the last gathering before the Nov. 6 election.

There was chatter today about how long Chairman Ben Bernanke will remain in his post. His term as chairman expires in 2014. If Mitt Romney wins the presidential election, he may try to get Bernanke to leave his job early. It is not clear if he wants a third term.

It's hard to find stocks in the black
Materials, energy and financial stocks were the weak links in the market, but the 10 S&P 500 sectors were all lower. Only 67 S&P 500 stocks were higher, led by Whirlpool, Harley-Davidson (HOG) and Coach (COH).

Monster Beverage (MNST), DuPont, Regions Financial (RF) and Assurant (AIZ) were the laggards.

Consumer discretionary stocks were higher, thanks in part to Coach and Harley-Davidson, up $3.98 to $58.15 and $3.36 to $46.89, respectively.

Only two of the 30 Dow stocks were higher: Intel (INTC) and Microsoft (MSFT), the publisher of MSN Money.

Only 35 Nasdaq-100 stocks were higher, led by Yahoo and Virgin Media (VMED). Monster Beverage (MNST) and Randgold Resources (GOLD) were the laggards. Monster Beverage sagged for a second day after the Food & Drug Administration confirmed that it is investigating reports of people dying after drinking its energy drinks.

Short hits from the markets -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.1000%

0.090%

11.11%

900.00%
5-year Treasury note 

0.758%

0.779%

20.32%

-8.67%
10-year Treasury note

1.764%

1.798%

7.76%

-5.72%
30-year Treasury bond

2.915%

2.947%

-3.86%

0.90%
Currencies











U.S. Dollar Index

80.08

79.736

0.07%

-0.55%
British pound

1.5946

1.6021

-1.32%

2.63%
(in U.S. $)

 








U.S. $ in pounds

£0.627

£0.624

1.34%

-2.56%
Euro in dollars

$1.30

$1.31

0.99%

0.18%
(in U.S. $)

 








U.S. $ in euros

€ 0.770

€ 0.765

-0.98%

-0.18%
U.S. $ in yen 

80.06

79.93

2.69%

3.84%
U.S. $ in Chinese

6.27

6.25

-0.14%

-0.85%
yuan











Canada dollar

$1.008

$1.008

-0.89%

2.71%
(in U.S. $)

 








U.S. dollar 

$0.993

$0.992

0.97%

-2.64%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,709.40

$1,726.300

-3.64%

9.10%
(per troy ounce)

 








Copper (-HG)

$3.570

$3.622

-5.02%

3.89%
(per pound)

 








Silver (-SI)

$31.7930

$32.252

-8.05%

13.89%
(per troy ounce)

 








Wheat (-ZW)

$8.6875

$8.783

-3.74%

33.09%
(per bushel)

 








Corn (-ZC)

$7.5600

$7.613

-0.03%

16.94%
(per bushel)

 








Cotton 

$0.7427

$0.769

5.12%

-18.99%
(per pound)

 








Coffee

$1.6085

$1.645

-7.29%

-29.96%
(per pound)

 








Crude oil (-CL)

$86.67

$88.650

-5.99%

-12.30%
(per barrel)










 

493Comments
Oct 23, 2012 9:17PM
avatar
7 out of 10 cars made by Gov't Motors is made in China. Yet, Obuttmo never mentions this. Why?
BTW, this was just released in GM's quarterly report.

All of the union workers were bailed out of their pension bankruptcy by the US tax payer. All of the non-union GM employees lost their pension. That is why Obuma and the AFL/CIO insisted on staying out federal bankruptcy court like any other American business would have been forced to do.

Obuma and his union butt buddies above the law
The rest of us, Obuma's peasant class workers.

Oct 23, 2012 9:07PM
avatar
It's amazing to me that Romney and Ryan have convinced so many people that the wealthy class are more important than your Social Security and Medicare that you've paid into all of your working life.

All bow to the mighty billionaire "job creators". If you're not one of them, you are just earth scum and depriving them of precious air.

Oct 23, 2012 9:05PM
avatar

anybody know how ticker symbol EFU fared today?  i think it stands for "europe f*** y**"

 

be safe out there ...

 

Oct 23, 2012 9:02PM
avatar
If everyone would vote based on facts and facts alone, Obummer would not receive one single vote! Here they are:
1) Failed economic policies - deficit at an all time high! (promised to cut in half)
2) Failed Job creation policies - unemployment still way too high (promised less then 6%)
3) Failed energy policies - gas double what it was four years ago
4) Failed Foreign Policies - Iran, Syria, North Korea, etc......
Can we really take four more years of this? If you Voted for Obummer because you wanted change then you need to vote against him for the same reason! We need change, now more then ever!

Oct 23, 2012 8:47PM
avatar

Now, let's say you are vacationing in a foreign country and you life became in danger....

WHO would you be calling? Obama or Romney?

Do you know why Obama don't care about small businesses???

HE didn't know they existed.

 

The losers will obviously give thumbs down...go figure!!!

Oct 23, 2012 8:41PM
avatar

The analysts are very sure that an Obama victory will send the stock market into a spin. Today was proof of that. A Romney victory will stabalize the economy and the stock market .... not my thought ...this is what the analysts say??

Barry could screw up a wet dream for everyone except the Hispanics and Blacks that are on the entitlement train. I'm surprised that more can't see that.

If you go back to the Carter/Reagan election ... this one follows that to a tee. Same scenarios, same crash in the economy going down to the wire, and the beginning of radical inflation. I think that you can count on the same outcome which is Romney by a wide margin!!!

Oct 23, 2012 8:38PM
avatar

All those about LMFAO.... gotcha!

Now humour is in order:

 

Q. Why won't Obama release his college recors?
A. Because he had them shredded along with his mosque attendance records.

 

Q: Why is ObamaCare like an apple a day?
A: It keeps the doctor away.

 

Q: What's the difference between Pinocchio and Obama?
A: Obama's nose doesn't grow when he lies.

Oct 23, 2012 8:13PM
avatar
Brutus625 - I've agreed with most, and always enjoyed your perspectives for a while now. But short of an actual revolution - what can be done?

As much as you or I might like to see it - Gary Johnson will not be our next President. Nor will a "protest vote" do anything to change that fact.

I have voted "libertarian" my entire life.  For all the good that has done! For me (although I feel better for it) or the Country. But in fact - in reality - it's made no difference whatsoever.

But please keep posting - IMO you are one of the few here worth reading. At least I know I have at least one  "kindred soul" out there in internet-land!
Oct 23, 2012 8:12PM
avatar
Yesterday a Guy that I put a lot of trust in said the DOW going to 10,900 and if Obama is elected it well continue down to 7,000. After that it depends if the republicans control both houses of congress and stand in the way of Obama's Econom Crushing Policies. 
Oct 23, 2012 8:11PM
avatar
Gross from Pimco warned investors about what the earnings reports would say.  
Oct 23, 2012 8:08PM
avatar

Regardless of who gets elected we should all back him up for the next four

years. Help him in accomplishing his vision! Instead of half the nation trying

to do the opposite hoping their party will win the next election.

 

Lets plan the future united, instead of what is being done currently..

Oct 23, 2012 8:06PM
avatar

Gotta raise taxes on everyone slightly - maybe 5%.  Impose a new American Minimum Tax - $50 per person.  90 years old?  That'll be $50 per year.  Married with 4 kids.  $300 per year.  This will catch the 40-% that pay zero Federal Income Tax.  Everyone is in this and everyone should and must contribute.

 

Now spending.  Cut it.  I don't know if the figure is 5% or 3.5% or 10% but if you receive a Federal Government Check - it is now reduced by that amount.  Military? - yup.  Social Security? - Yup 

Federal employee?  Yup.  receive a Federal pension?  Yup. Etc.

 

Spending on foreign aid.  Cut it - in fact Gut it.

 

Social Security (FICA) Rates.  4.0% up to $50,000.  6% from $50,000 to $100,000.  7% $100,000 to $125,000.  0 from $125,000 to $250,000. Then $250,000 on up - 4%.  Employer match 5% on all wages - no limit.

 

Medicare - increase the rate to 2.0% (from current 1.45%) unlimited on both employees and employers. Hire more medicare auditors to  find fraud and then punish the #)@!_ out of those that are cheating us all.

 

Impose the self employment tax on rental activities - even farm rentals, and S-corporation income - even if passive.  Rates consistent with the FICA + Medi+ employer match.

 

Fix AMT so it only hits those it was intended to hit.

 

Provide a discounted rate on dividends and capital gains may 22% ish.

 

Reduce C-Corp rates but close loopholes, section 199, Foreign sales exemptions related to DISC's.

 

Eliminate credits - especially ethanol, and wind energy.  If these industries cannot exist and be economically feasible on their own - then shut them down.

 

Eliminate the child tax credit - why provide an incentive for additional children.

 

Re-tool the earned income credit.

 

We cannot tax the rich enough to solve the problem. We cannot cut spending enough to solve the problem.  We must attack the issue from both sides. My suggestions are a way to do that - everyone and I do mean everyone would share in the solution.  Pass  a balanced budget amendment - I live within my means - why shouldn't Uncle Sam?   THis is not a red state or a blue state problem - it is not a Republican or Democrat problem it is an American problem and we'd better get serious about this or there will be hell to pay!!

 

Oct 23, 2012 7:54PM
avatar

Ok, Ok, Ok!

Would anyone agrees with me and Trump in saying...........as it will be aired on Wednesday...

 

OBAMA, YOU ARE FIRED.

 

by the way, what does LMFAO means...forgive me for my 'french ignorance'....

Oct 23, 2012 7:42PM
avatar
Doesn't any vote for any losing candidate fall on deaf ears?
Oct 23, 2012 7:33PM
avatar
IMO - A vote for Obama only serves to illustrate your stupidity, while a vote for Romney only serves to illustrate your ignorance.  So you have a choice, you can continue to be stupid or ignorant, or you can choose a different path and vote for another candidate - there will be several on your ballot.

Gary Johnson 2012

Oct 23, 2012 7:30PM
avatar

OBUMMER the Smoker.....

OBUMMER the Alcoholic......

Yeap, he talks like an AA who just got up from his last beer or Coke line........HE GOES WITH THE FLOW.....

 

WANT to keep your JOB...............................vote ROMNEY

WANT to experience WELFARE.................vote OBAMA

Oct 23, 2012 7:30PM
avatar
Trump is supposed to announce a bombshell about Obama, on Wed.
Oct 23, 2012 7:27PM
avatar
N H

It's Bush's fault...........

-------------------------------------------

 

Why didn't you guys invite him to your convention (again)?

I'd think you would have had everyone sit in his lap and tell him what you wanted for Christmas....

Oct 23, 2012 7:26PM
avatar
Gee, I'm better off than I was 4 years ago.  With any luck the Mayan calendar is right and I won't have to listen to another politician.
Oct 23, 2012 7:02PM
avatar
So much for the economy turning around anytime soon....
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