Dow falls 115 as jobs, economic worries hit stocks
A soft jobs market is not the only reason for the sell-off in stocks and oil. Add in weak Hewlett-Packard results and economic weakening in Europe and China. Gold manages to end higher. New-home sales grind higher; housing stocks slip.
Stocks slumped today and gold (-GC) settled at its highest level since April on a disappointing report on jobless claims and more evidence of slowing economies in Europe and China. Plus, there was new skepticism that the Federal Reserve will start a new stimulus program in September.
Initial jobless claims for the latest week came in at 372,000, up from 368,000 the week before, though down from 414,000 in the same week a year ago. The claims rate has averaged just under 374,000 this year, down from an average of 410,000 a year ago. Evidence of serious growth for jobs and the economy requires the claims number to drop below 350,000, something not seen since early 2008.
Adding to the stress was Hewlett-Packard's (HPQ) disappointing earnings report from late Wednesday. HP wrote off most of its 2008 investment in EDS and reported that personal computer sales fell 10% from a year ago. The results were similar to Dell's (DELL), which reported after Tuesday's close. HP fell $1.57 to $17.64; Dell was off 44 cents to $11.24.
But there was a little good news -- again from housing. New-home sales rose to 372,000 units in July from June, matching the 2012 high set in May. Sales are up 25% or so from a year ago, but well off the peak of 1.26 million units in 2005 and the 671,000 average annual sales rate since 1963. Homebuilding shares, however, fell back with the market.
The Dow Jones industrials ($INDU) fell 115 points to 13,057. The loss was the blue chips' first of more than 100 points since July 24 and its worst loss since July 6. The Standard & Poor's 500 Index ($INX) was down 11 points to 1,402, and the Nasdaq Composite Index ($COMPX) dropped 20 points to 3,053. The Dow's loss was its fourth in a row; the S&P 500 and Nasdaq were down for the third time in the last four days.
Article continues below.
The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, was down 21 points to 2,762. Apple (AAPL), the biggest influence on the index, was down $6.24 to $662.63. It had fallen to as low as $661.15.
The 10-year Treasury yield fell to 1.666% from Wednesday's 1.719%.
The Dow's loss was its fourth in a row and third out of four for the S&P 500 and Nasdaq.
If you want some good news in the sell-off, it came from the S&P 500. The index hit 1,400 once and promptly stayed higher. That suggests support for stocks at that level.
On Friday the government will report on durable-goods orders, but investors will likely pay more attention to the news from Europe.
Futures trading suggests a modestly higher open for stocks.
Salesforce.com shares sag on guidance
After the close, shares of Salesforce.com (CRM) fell $7.57, or 5.2%, to $139.20. The regular close of $146.77 was down $1.85.
Earnings for the quarter that ends in October, net of one-time charges, will be 31 to 32 cents a share, Salesforce said. The Street was expecting 34 cents a share. Sales will be $773 million to $777 million, the company said. That's a touch better than the $772 million the Street has been expecting.
In the second quarter, Salesforce, which sells sales-force-management software, earned 42 cents a share, 3 cents better than expected. Revenue was up 34% to $731.6 million. While the company reported a loss under generally accepted accounting, it generated $106 million of free cash flow (cash after capital expenditures).
A new Kindle launch?
Amazon.com (AMZN) sent out media invites today for an event on Sept. 6 at the Barker Hangar in Santa Monica, Calif.
No other details were disclosed. But the invitation quickly sparked speculation that the online retailer is gearing up for the launch of a new Kindle Fire tablet.
"Why September 6?" BGC Partners analyst Colin Gillis told Marketwatch. "I’ll give you a hint -- Microsoft (MSFT) and Nokia (NOK) are doing their event on September 5. Everybody’s trying to get in front of Apple."
Apple is expected to introduce its new iPhone on Sept. 12. Amazon shares fell 49 cents to $240.71. The regular close of $241.20 was down $1.90 from Wednesday.
Bleak news from HP; Boeing drops on an order cancellation
Hewlett-Packard shares slumped after the company reported results that weren't as bad as feared. But, on the conference call, CEO Meg Whitman said margins for personal computers are likely to be weak. "The reality is, we're locked in serious competitive battles, but we’re determined to win," Whitman added.
RBC Capital analyst Amit Daryanani told Marketwatch he sees Chinese manufacturer Lenovo cutting prices to gain market share in the United States. And he interpreted Whitman's comment as meaning HP "may sacrifice some margin degradation for PC share."
Meanwhile, Boeing (BA) was off $2.44 to $70.36 after Qantas, the Australian airline, canceled orders for 35 787-9 jetliners, Boeing's largest 787 model. The airline reported a quarterly loss because of heavy competition, particularly from Emirates Air.
Boeing's stock-price decline was responsible for 14 points of the Dow's loss. HP's decline cut nearly 12 points from the Dow.
Shares of Big Lots (BIG), the discount retailer, plunged $8.08 to $30.76 for the biggest drop in the S&P 500. Profit excluding some items will decline to $2.80 to $2.95 a share this year, reduced from a previous projection of $3.25 to $3.40 a share.
The company said fiscal-second-quarter earnings fell 38% because of weak sales in outdoor furniture and other areas because of the hot summer.
|Energy prices -- New York close (updated)|
|Thur.||Wed.||Month chg.||YTD chg.|
|Crude oil (-CL)||$96.27||$97.26||9.32%||-2.59%|
|Heating oil (-HO)||$3.1330||$3.1287||10.01%||7.51%|
|Natural gas (-NG)||$2.8020||$2.8260||-12.68%||-6.26%|
|(per mil. BTU)|
|Unleaded gasoline (-RB)||$3.1158||$3.1042||12.31%||17.25%|
|(per gallon; AAA)|
Maybe the Fed won't make a move
The market also was dismayed by James Bullard, the president of the St. Louis Federal Reserve Bank, who told CNBC he could see interest-rate hikes in 2013 if current trends continue. He also said he would not be concerned about the economy unless jobless claims top 400,000 a week.
Bullard is not a voting member of the Federal Open Market Committee this year, but he is a prominent hawk among the presidents of the 12 Federal Reserve Banks, and he has influence. So traders interpreted his comments as suggesting a new round of asset purchases is not yet a done deal.
Weakening data from China and Europe
Meanwhile, the data from China and Europe were weak, according to Markit.com, an economic research firm that tracks data around the world. Markit reported that its flash Chinese Manufacturing Purchasing Managers Index came in at 47.8 in July, a nine-month low. To meet its goals, China will have to step up interest-rate cuts.
European PMI reports were no better as the problems of the weak European countries, especially Greece, Italy and Spain, start to weigh on the strong, including France and Italy.
German Chancellor Angela Merkel and French President Francois Hollande were meeting today to discuss Greece's debt crisis.
Gold and oil jump, expecting more central bank stimulus
From all this bad news, traders are still assuming big moves to boost economic growth from central banks around the world. As a result, gold and silver (-SI) were higher today.
Gold settled up $32.30 to $1,672.80 an ounce. Silver jumped 90 cents to $30.456 an ounce, and copper was up 3.55 cents to $3.4925 a pound.
Gold is up 3.4% this week alone on worries about economic uncertainty in China and Europe in particular. It's up 6.8% for the year. For the same reasons, silver is up 8.8% this week and 9.1% for the year. Copper has gained 2.1% this week and is up 1.6% for the year.
But crude oil (-CL) in New York settled down 99 cents to $96.27 a barrel as profit-taking hit the market, apparently after Merkel said she expects Greece to fulfill the terms of its bailout. Part of the decline was due to skepticism (for today, anyway) that central banks will apply new stimulus measures to the global economy.
Brent crude settled up 10 cents to $115.01 a barrel. The retail price of gasoline was $3.718 a gallon today, according to AAA's Daily Fuel Gauge Report, up slightly from Wednesday's $3.716.
Crude oil is up 0.3% this week but down 2.6% for the year.
A big bias to the downside
Only three of the 30 Dow stocks were higher: Kraft Foods (KFT) and Pfizer (PFE). AT&T (T).
All 10 sectors of the S&P 500 were lower, with materials stocks the weak link.
Steel shares were especially weak after analyst Tony Rizzuto of Dahlman Rose & Co. downgraded the entire sector. Recent price increases "have not been matched internationally, potentially inviting increased imports later this year and placing a de-facto ceiling on domestic prices," he wrote today.
U.S. Steel (X) was down $1.58 to $21.19. AK Steel (AKS) dropped 25 cents to $5.67. Freeport-McMoRan Copper & Gold (FCX) fell 23 cents to $36.77.
Only 77 S&P 500 stocks were higher, led by Federated Investors (FII), First Solar (FSLR) and Best Buy (BBY).
Big Lots, Hewlett-Packard and coal-producer Alpha Natural Resources (ANR) were the laggards.
Only 22 Nasdaq-100 stocks were higher, led by Warner Chilcott (WCRX), Randgold Resources (GOLD) and Express Scripts (ESRX). Chinese Internet company Baidu (BIDU), hard-drive maker Seagate Technology (STX) and Dell were the laggards.
|Short hits from the markets -- New York close (updated)|
|Thur.||Wed.||Month chg.||YTD chg.|
|13-week Treasury bill||0.1000%||0.100%||0.00%||900.00%|
|5-year Treasury note||0.687%||0.713%||14.69%||-17.23%|
|10-year Treasury note||1.666%||1.719%||11.66%||-10.96%|
|30-year Treasury bond||2.780%||2.825%||7.88%||-3.77%|
|U.S. Dollar Index||81.359||81.497||-1.63%||1.04%|
|(in U.S. $)|
|U.S. $ in pounds||£0.630||£0.629||-1.21%||-2.11%|
|Euro in dollars||$1.25||$1.25||2.01%||-3.16%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.797||€ 0.798||-1.97%||3.27%|
|U.S. $ in yen||78.74||78.56||0.79%||2.13%|
|U.S. $ in Chinese||6.35||6.35||-0.10%||0.41%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$96.27||$97.26||9.32%||-2.59%|
Jobless claims are down, but good news oil is up so prices on everything from gas to groceries will continue to rise. Tell me how a new stimulus fixes this whole mess we are in.
Tell me why the everyday American should be happy about a new round of stimulus. Where the heck is all the good from all the stimulus before????
Why would anyone vote for Obama again?
Give me a THUMBS UP, if you will become a Patriot of America and vote for Romney/Ryan!
THUMBS DOWN, if you will assist in America's fall into ruin and vote for Obama/Biden.
Initial jobless claims for the latest week came in at 372,000, up from 368,000 the week before,
Of those 372,000 how many give a rats **** about abortion, gay marriage, Romney's taxes, or providing taxpayer birth control to the Flukes of America?
Perhaps Obama should concentrate on REAL ISSUES not these social issues that only his ignorant base give a **** about!
James Bullard, the president of the St. Louis Federal Reserve Bank, who told CNBC he could see interest-rate hikes in 2013 if current trends continue. He also said he would not be concerned about the economy unless jobless claims top 400,000 a week.
Traders interpreted his comments as suggesting a new round of asset purchases is not yet a done deal.
Awwwww, poor traders! Not enough Americans lost their jobs for them to celebrate and watch stocks rise on the tears of American citizens :(. These guys are pathetic! These job losses are not just numbers they are PEOPLE!
America needs a wake up call, and Obama sure as hell is not it!
People without education, without jobs, without tangible property, living off the public dole are easily lead and controlled. So as the trend continues and the present government grinds more and more people down the gain more control.
Being in Illinois a vote against them is wasted. We have too many dead and illegal individuals voting. But vote anyway it is our duty.
Are we better now than four years ago. I don't know anyone who is. Maybe I just travel in the wrong circles.
Is it true that Barry and the Idiot will be handing out voting instructions so that the sheep do not need to thing about what they are doing?
What was the unemployment when Bush left office? In case youve forgotten,it was under 6%,at 5.7%. What is it at now? Around 9%,but if you factor in all the unemployed,underemployed,or those that have given up trying to find a job lately,that rate jumps up to well over 15%. More Americans live in poverty now than when Bush left office,more Americans are out of work(25 million to be exact) You Remo are a good example of the ones that claim most Americans are racist by heart,yet your party are the real racists,not the other way around. Why was civil rights legislation passed by LBJ in the 60's? Because the Republicans demanded it,and because you see,it was the liberal white southerners who were a cause of much of the violence at the time. Get your facts straight,stop being a hypocrite,and learn to live outside of your little Utopia fantasy land. You want government to tell you what to do,I as well as Conservatives are telling government to stay out of our way! When you have a good argument,with facts,not just some made up mumbo jumbo you came up with,then post something.
There you go blaming republicans for the demise of the U.S. Better that you blame both or neither. This social democratic, lobbyist, selling off our birthright, political contribution mayhem is to blame.
We need to kick the foreign lobbyists out of Washington D.C., limit political campaign contributions and further clean out the barn.
Ross Perot was onto something very important. Now look at America.
The over inflatted dow is down 90 points, it needs to correct itself somehow.
How about loss of interest by the middle class in giving our money to the upper class?
Don Meredith is my mother's 2nd cousin 2 times removed (okay..not a close relative but related).
You're right though, Turn out the lights, the party is over. BYE BYE OBAMA no more Drama.
The following are 24 stats that show just how much Obama has royally messed up our economy....
#1 Under Bill Clinton, the average unemployment rate was 5.2 percent. Under George W. Bush, the average unemployment rate was 5.3 percent. Under Barack Obama, things have been much worse. The month after he took office the unemployment rate rose above 8 percent and it has stayed there ever since.
#2 Under Barack Obama, the velocity of money (a very important indicator of economic health) has plunged to a post-World War II low.
#3 Real median household income has decreased by more than 4000 dollars since Barack Obama entered the White House.
#4 The United States has plenty of oil and we should not have to import it from the Middle East. Unfortunately, Barack Obama has an absolutely nightmarish energy policy. Under Bill Clinton, the number of drilling permits approved rose by 58 percent. Under George W. Bush, the number of drilling permits approved rose by 116 percent. Under Barack Obama, the number of drilling permits approved decreased by 36 percent.
#5 When Barack Obama took office, the average price of a gallon of gasoline was $1.85. Today, the average price of a gallon of gasoline is $3.71.
#6 Under Barack Obama, the United States has lost more than 300,000 education jobs.
#7 Since Barack Obama became president, the number of long-term unemployed Americans has risen from 2.7 million to 5.2 million.
#8 For the first time in the post-World War II era, the employment-population ratio has not bounced back after a recession. The percentage of working age Americans with a job has been below 59 percent for 35 months in a row.
#9 While Barack Obama has been president, U.S. home values have fallen by another 12 percent.
#10 More than three times as many new homes were sold in the United States in 2005 as will be sold in 2012.
#11 Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row. Thanks Obama.
#12 When Barack Obama first entered the White House, an ounce of gold was going for about $850. Today, the price of gold is over $1630 an ounce.
#13 Since 2008, our economy has lost 1.3 million jobs while at the same time 3.6 million more Americans have been added to Social Security's disability insurance program.
#14 The number of Americans on food stamps has grown from 31.9 million when Barack Obama took office to 46.4 million today. How much more "hope and change" are we going to be able to endure?
#15 As I wrote about the other day, it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.
#16 If you can believe it (and this really is hard to believe), more than half of all Americans are now at least partially financially dependent on the Government.
#17 The total amount of money that the federal government gives directly to the American people has grown by 32 percent since Barack Obama became president.
#18 Under Barack Obama, federal spending as a percentage of GDP (25 percent) is the highest that it has been since World War II.
#19 The Obama Administration has been spending money on some of the most insane things imaginable. For example, in 2011 the Obama administration spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.
#20 The U.S. Government has run a budget deficit of well over a trillion dollars every single year under Barack Obama.
#21 Under Barack Obama, U.S. debt was downgraded from AAA status for the first time ever.
#22 Since Barack Obama took office, the U.S. national debt has increased by 50 percent.
#23 Since Barack Obama became President; the U.S. national debt has increased by an average of more than $64,000 per taxpayer.
#24 During the Obama Administration, the U.S. national debt has grown more than it did from the time that George Washington became president to the beginning of Bill Clinton's second term as president.
Somehow you forgot that?
3.6 years later the progress = $3.89 !
yes, it's the summer of recovery !
NEXT CRETIN ?
Hmmmm, odd how the DOW was OVER 15,000 when Bush was in office.....
Oh and those jobs created are crap when we LOSE twice as much jackass! Thus the reason the DOW is down today.......
And Obama "may" have gotten Bin Ladden, yet he also has over 2000 dead AMERICAN soldiers in Afghanistan on his hands........
And odd how FUEL PRICES have DOUBLED since Obama took office! How DEFICITS have DOUBLED since he took office, and how INFLATION is setting in......
STFU, you are embarassing yourself!
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[BRIEFING.COM] S&P futures vs fair value: -0.20. Nasdaq futures vs fair value: +3.00. The S&P 500 futures continue to alternate between slim gains and losses while Nasdaq futures trade higher by 0.2%. Adobe Systems (ADBE 46.30, +2.94) has contributed to the pre-market strength of Nasdaq futures as the software company adds 6.8% after beating on earnings.
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