Dow off 102 as European political woes slam stocks

Updated: 5:23 p.m. ET

Stocks fell for the third time in four days as worries erupted again over whether the European Union can cope with its debt crisis. But losses were cut substantially from early declines.

The poor showing of French President Nicolas Sarkozy in Sunday's  election was a big issue. Just as important was the collapse of the government of the Netherlands.

After hours, shares of Netflix (NFLX) were off nearly 16% after guidance on online streaming in the second was was less than expected. Texas Instruments (TXN)shares were up 3.6% to $33.05 after hours as the company said a long inventory-related decline in demand had ended. Earnings fell 60% from a year ago, but revenue was stronger than expected.

 Wal-Mart Stores (WMT) shares were down $2.91 to $59.54, their biggest percentage decline in a year, after The New York Times reported the company engaged in widespread bribery in Mexico to get stores built more quickly. The worry is that the issue may result in extensive management shakeups.

The Dow Jones industrials ($INDU) closed down 102 points to 12,927. Wal-Mart was responsible for 22 points of the loss. The Standard & Poor's 500 Index ($INX) dropped 12 points to 1,367, and the Nasdaq Composite Index ($COMPX) was off 30 points to 2,970. The Nasdaq-100 Index ($NDX) was off 23 points to 2,654.

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Apple (AAPL) was off $1.28 to $571.70 a day before reporting fiscal-second-quarte​r earnings. The shares had been as low as $556.64. The loss is its fourth in a row and ninth in the last 10 sessions.

Apple's shares are off 10.1% from their April 9 closing high of $636.23 and 11.2% from their $644 intraday high on April 9.

Neflix results greeted with skepticism
Netflix shares were off $15.86 to $85.93 from a regular close of $101.84. The company lost 8 cents a share in the first quarter on revenue of $870 million. The earnings were down from $1.11 a share a year ago on $718.5 million.

Content costs and expenses for building its network were cited for the loss.

The company forecast a loss of 10 cents a share to earnings of 14 cents. Revenue should hit $873 million to $895 million.

Investors bought Texas Instruments shares after the chip maker reported first-quarter earnings of 22 cents a share in earnings, or $265 million, on revenue of $3.1 billion. That was down from 55 cents, or $666 million. Revenue was off 8% from a year ago.

The company expects $3.2 billion to $3.48 billion in the second quarter and 30 to 38 cents a share in earnings.

European stocks tumble on election, Dutch news
The big-picture point about the French election, which heads to a May 6 runoff between Sarkozy and Socialist Francois Hollande, and the Dutch situation is this: Europe's rush toward major austerity is in trouble, and no one is sure what will happen next.

The French election and the collapse of the Dutch government prompted an ugly sell-off in European stocks, with German and French stocks off about 3%. U.S. stocks opened lower and sagged until a rebound set in around 2 p.m. ET that cut the losses nearly in half.

In addition to political worries, the April purchasing managers index of manufacturing in Germany contracted at the fastest rate since 2009.

China was a player in today's market as well after a purchasing managers report suggested manufacturing may not have bottomed yet.

Energy prices -- New York close
			Mon.			Fri.			Month chg.			YTD chg.
Crude oil (-CL)			$103.11			$103.88			0.09%			4.33%
(per barrel)
Heating oil (-HO)			$3.1429			$3.1408			-0.86%			7.85%
(per gallon)
Natural gas (-NG)			$2.0070			$1.9270			-5.60%			-32.85%
(per mil. BTU)
Unleaded gasoline (-RB)			$3.1476			$3.1100			-4.85%			18.45%
(per gallon)
Brent crude			$118.60			$118.76			-3.48%			10.45%
(per barrel)
Retail gasoline			$3.8580			$3.8630			-1.71%			17.77%
(per gallon; AAA)

It could have been a worse day
The good news, if you can call if that, is that the Dow rebounded substantially from a loss of as many as 184 points.

The Dow finished the day down 2.6% from its 2012 closing high of 13,264.49, reached on April 2, and finished at its lowest level since April 16. The S&P 500 is off 3% since its April 2 peak of 1,419.04 and ended at its lowest level since April 10.

The Nasdaq is down 4.8% since April 2. Its close today was its lowest since March 8.

The selling sent the dollar higher against the euro and the British pound. It pushed crude oil (-CL) in New York to $103.11 a barrel, down 77 cents Brent crude was off 5 cents to $118.71 a barrel.

The retail price of gasoline fell a half-penny to $3.858 a gallon from Sunday, according to AAA's Daily Fuel Gauge Report. The national average has fallen 7.8 cents a gallon, or about 2%, since peaking at $3.936 a gallon on April 5 and 6. 

Gold (-GC) settled down $10.20, or 0.6%, to $1,632.60 an ounce. Silver (-SI) was down 3.5% to $30.53 an ounce; copper (-HG) was off 7.1 cents, or 1.9%, to $3.6275 a pound.

The selling also pushed U.S. interest rates lower, with the 10-year Treasury yield at 1.933%, down from Friday's 1.97%. And the selling pulled U.S. interest rates lower as some investors sought safety in U.S. securities.

A big week for earnings
Today's slump comes at the start of one of the three biggest weeks for U.S. corporate earnings in the first-quarter earnings season.

Besides Texas Instruments and Netflix today, reports this week include Apple after Tuesday's close; 3M (MMM) and AT&T (T) before Tuesday's open; Boeing (BA) and Caterpillar (CAT) on Wednesday; Amazon.com (AMZN), Exxon Mobil (XOM) and Starbucks (SBUX) on Thursday; and Chevron (CVX), Ford Motor (F) and Procter & Gamble (PG) on Friday.

Plus, the Federal Reserve starts an important two-day meeting on Tuesday.

Bribery allegations wipe out Wal-Mart's 2012 gains
With today's loss, Wal-Mart shares are now in the red for 2012. The stock had been up 4.5% for the year after Friday's close. Now, it's down 0.6%. Wal-Mart is the biggest loser in percentage terms among the 30 Dow stocks, and it has subtracted some 23 points from the blue-chip index.

Shares tumbled on The New York Times report that the retailing giant failed to notify law enforcement officials after its own investigators found evidence that millions of dollars in bribes had been paid in Mexico to build stores across the country. Wal-Mart allegedly paid more than $24 million in bribes to ensure rapid permitting of new stores across Mexico.

Wal-Mart employs 209,000 people in Mexico and is the country’s largest private employer.

Late Sunday, the head of a watchdog group said Mexico should investigate the allegations of a vast bribery campaign by top executives of Wal-Mart's Mexican unit, The Associated Press reported.

A lawyer for Wal-Mart of Mexico had no comment on any of the allegations.

Economic softness continues in Europe and China

In Europe, Markit's preliminary purchasing managers index, which measures business activity

in the eurozone, fell for the third month in a row in April, reaching a five-month low. The index fell to 47.4, down from 49.1 in March, as the rate of decline in private-sector economic activity accelerated. 

HSBC Holdingssaid today that its preliminary purchasing managers index for China, which measures manufacturing activity in the world's second-largest economy, came in at 49.1 in April.

While the figure marks a small improvement over March's final reading of 48.3, any reading below 50 still indicates contraction.

A broad decline

Not much to write home about today. There were declines in all 10 sectors of the S&P 500. On a relative basis, energy is the strongest sector, with consumer staples and materials the laggards. Wal-Mart is in the consumer staples sector. Steel, copper and aluminum stocks were weaker because of the news from Europe and China.

Only three of the 28 Dow stocks were higher today: Exxon Mobil, JPMorgan Chase (JPM) and Travelers Companies (TRV). Wal-Mart, as noted, is the laggard. 

Only 59 S&P 500 stocks finished in the black, led by natural-gas producer Chesapeake Energy (CHK) and SunTrust Banks (STI).  Solar-panel maker First Solar (FSLR) and Kellogg (K) were the laggards.

Fifteen Nasdaq-100 stocks finished higher, led by Warner Chilcott (WCRX) and Akamai Technologies (AKAM). First Solar and Checkpoint Software (CHKP) were the laggards. 

Kellogg cuts outlook; Nestlé buys Pfizer's infant nutrition business

Cereal-snack-food maker Kellogg shares fell $3.29 to $50.70. The company cut its full-year outlook today after a disappointing first-quarter performance in Europe and in some product categories in the United States. The world's largest cereal company said it would still invest in future growth. Kellogg now expects operating earnings to fall 2% to 4% in 2012, from its prior forecast of flat or up slightly. It said sales should rise 2% to 3%, down from a prior forecast for growth of 4% to 5%.

Swiss food giant Nestlé (NSRGY) agreed today to buy Pfizer's (PFE) infant nutrition business for $11.9 billion to expand its presence in the global baby food market. Pfizer was off 18 cents to $22.38. Nestlé was off 33 cents to $60.95 in New York.

Microsoft (MSFT) and Facebook said today that Facebook is buying about 650 of the 925 AOL patents and patent applications Microsoft bought. Facebook will also get a license to use the rest of the AOL  patents. Similarly, Microsoft  will get a license to use the patents Facebook is buying. This part of the arrangement amounts to an agreement between Facebook and Microsoft not to sue each other over any of the AOL patents. Microsoft was down 30 cents to $32.12.

Oil giant ConocoPhillips (COP) shares fell 55 cents to $72.33. The company reported first-quarter earnings of $2.9 billion, down from $3 billion last year as its oil production declined following the halting of operations in China due to oil leaks and asset sales. Excluding $330 million of special items, first-quarter 2012 adjusted earnings were $2.6 billion, or $2.02 a share, less than the $2.08 analysts expected. The company plans to spin off its refining business next week.
 

Short hits from the markets -- New York close
			Mon.			Fri.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0700%			0.070%			0.00%			600.00%
5-year Treasury note			0.815%			0.846%			-21.86%			-1.81%
10-year Treasury note			1.933%			1.970%			-12.77%			3.31%
30-year Treasury bond			3.084%			3.128%			-7.80%			6.75%
Currencies
U.S. Dollar Index			79.536			79.313			0.50%			-1.22%
British pound			1.6132			1.6137			0.76%			3.82%
(in U.S. $)
U.S. $ in pounds			£0.620			£0.620			-0.75%			-3.68%
Euro in dollars			$1.31			$1.32			-1.46%			1.49%
(in U.S. $)
U.S. $ in euros			€ 0.761			€ 0.758			1.48%			-1.46%
U.S. $ in yen			81.30			81.58			-2.03%			5.45%
U.S. $ in Chinese			6.33			6.30			0.15%			0.06%
yuan
Canada dollar			$1.008			$1.008			0.61%			2.79%
(in U.S. $)
U.S. dollar			$0.992			$0.992			-0.61%			-2.72%
(in Canadian $)
Commodities
Gold (-GC)			$1,632.60			$1,642.80			-2.35%			4.20%
(per troy ounce)
Copper (-HG)			$3.626			$3.698			-5.20%			5.53%
(per pound)
Silver (-SI)			$30.5310			$31.6510			-6.01%			9.37%
(per troy ounce)
Wheat (-ZW)			$6.325			$6.2300			-4.28%			-3.10%
(per bushel)
Corn (-ZC)			$6.1250			$6.030			-4.89%			-5.26%
(per bushel)
Cotton			$0.9248			0.9101			-1.53%			0.87%
(per pound)
Coffee			$1.7895			1.7895			-3.27%			-22.08%
(per pound)
Crude oil (-CL)			$103.11			$103.88			0.09%			4.33%
(per barrel)