Dow off 102 as European political woes slam stocks

French voters effectively reject austerity; Holland's government collapses. Crude oil and gold fall. Netflix shares tumble after hours. Wal-Mart shares slump on Mexican bribery allegations. Apple falls ahead of earnings.

By Charley Blaine Apr 23, 2012 1:19PM
Charley BlaineUpdated: 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.

Article continues below.
Apple (AAPL) was off $1.28 to $571.70 a day before reporting fiscal-second-quarter 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)










 
116Comments
Apr 23, 2012 2:00PM
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the great recession continues.........
Apr 23, 2012 1:47PM
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What! No Apple to lift stocks? Oh come on. Apple has to jump in before the days out. Pump it, pump it, pump it back up. Blow some hot air into the market execs.

Next headline will read "stocks up on hope in Europe". Its getting so predictable its becoming ridiculous and laughable.

Apr 23, 2012 3:03PM
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The French reject austerity measures and the Netherlands government collapses --  why do I find this all so amusing? Of course Socialists will reject austerity measures. They want everyone living as miserable as everyone else, and they won't stop until everyone lives the same, acts the same, and has the same, as everyone else. That is the epitome and apparent beauty of Marxism. Nobody has anything and everyone suffers equally. What a lovely plan, and I am sure it will work marvelously for them. Marxism will usher in the worst kind of despair the world has ever seen, and yet everyone is rushing toward it at hyper-sonic speed. Coming to America -- very soon.   

Apr 23, 2012 1:47PM
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Stocks sinking
.............Obama to follow!
Apr 23, 2012 1:36PM
Apr 23, 2012 3:33PM
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Offthedole: Not even close on defining capitalism as thieves. Socialists are the thieves, taking money from one group and giving it to a another group -- that's theft... Capitalism is not perfect -- it is just vastly better than the alternatives. I wish everyone could live in harmony, sharing and generosity, however, that doesn't work very well in reality. Just like living in a commune doesn't work very well for very long. Honestly, for a commune to work, everyone has to have the same ideology and believe/act exactly the same thing -- without this kind of communal attitude, things fall apart very quickly. Hence, the more "community" you are, the less "individual" you become. The two are mutually exclusive. It's sad that we have to argue the virtues of individualism over communalism.   
Apr 23, 2012 2:50PM
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Endeavor, are you one of Obama's speech writers?????
You're extremely adept at writing fiction! You'd fit right in with his administration!
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The quicker each European country like Britain and Germany go back to their own monetary system, the better the world will be.  All the Socialist countries over there are dragging down the Capitalist countries including the USA.   

 

Not a shot fired, but the war on Capitalism is being won by the White House, the UN and the European Union

We need a change in November before it is too late.   The problem with socialism is:  Everyone is equal; except some are more equal than others.   

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If you are looking to make some money in this market, buy Canadian.  They were about the only smart people to require a down payment on a home, use their natural resources to stimulate the economy and decrease unemployment by reducing unemployment benefits.

 

If this country would have done the same, the economy would be a lot better here in America, and whether Holland has a government or France re-elects Sarkozy or a socialist probably wouldn't make a hill for beans.

 

We have wasted the last three years.

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Reality check for Ron Paul and going back to the gold standard.

 

US owns only 8,133 tons of gold valued at less than $61 million a ton which means we can cover about $496 billion dollars.

 

The US owes $53 trillion and the dollar covers fed, state, local and private debt .

 

We got $496 billion in gold to cover it. 

 

that means gold will increase in value by a factor of  107 times to meet our debt.

 

So gold will become about $180,000 an ounce.

 

Excuse me I have to run and buy some gold at the bargain price of $1600-$1700 an ounce.

Apr 23, 2012 1:35PM
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Remain defensive, watch out for sucker's rallies. We've had a couple already...At 1240 hrs they called to accelerate again.....Scumbags dominating everything down here....Still 2 and a half hours to go though...More later.

Apr 23, 2012 3:56PM
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When Rome dissolved;  Imported labor to take care of the masses, armies all around the world. the moral imperitive went by the wayside, near the end the bureaucrats stole everything they could.  Kinda sound familar?  Can we now offically be called Romerica?  I'm sure every congressperson believes they did nothing to effect this.  Oh no it was the other guy who did it.  Shall we throw in no accountability just for good measure?  All this shidt and no one to blame.  Wait didn't I sit here and let it happen?   
Apr 23, 2012 4:07PM
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Wow... Last year Social Security was solvent until 2037, now it will be broke by 2034...  After 5 more years of Obama  gutting the Social Security tax it will be bankrupt before he leaves office if he is re-elected.

We should be INCREASING the Social Security tax.  Obama is  a complete and utter failure...
Hope and Change...  Hope you see some of your Social Security money instead of change...
Apr 23, 2012 5:31PM
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Tomorrow the headlines will read" Stock market gains as Europe fixes problem. Or " The markets down as Bernake has not cough up QE3 yet". It's all a orchestrated game to be played to get a QE3 dumped into the markets hog trough to be pigged up by the big money houses. Really pathetic. 
Apr 23, 2012 4:48PM
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Rich, the problem is that the money the government is spending, really isn't creating jobs, just supplying bonuses for CEO's. I don't believe in entitlement, but if they're going to bail someone out, they would have been better off to bail out the consumers rather than the corporations. At least the consumers would spend the money, which would create demand for products, and workers to manufacture them.
Apr 23, 2012 5:33PM
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AS USUAL TOMORROW THE HORMONAL CONTROLLING SPECULATOR SCUMBAGS WILL TURN THINGS AROUND AND YOU WILL SEE AT LEAST AN 80 TO 90 POINT GAIN AND THE EUROZONE  WORRIES WILL DISAPPEAR. CHARLIE BOY WILL NARRATE THE USUAL SEWAGE AND ALL WILL BE RIGHT WITH THE WORLD. BRINGS A GODDAM TEAR TO MY EYE.
Apr 23, 2012 4:26PM
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Classic, True story. I'm 55 and counting on at least a little. Seems like the government should be liable to pay me at very least, a lump sum of what I've paid in!!!!!!!! I've been unemployed for a total of 6 days in 42 years. I've paid my share!
Apr 23, 2012 5:09PM
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Isn't rewarding a CEO for failure kind of like re-electing Obama??????????????
Apr 23, 2012 6:44PM
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Get rid of the illegal immagrants.  Let them go to mexican Wal-marts and spend their money where the ground itself is corrupt.  And when their done shopping they can go outside, line up to buy cartel drugs, and then line up to get shot by the cartel.  What the hell is matter with this country.  Can't they see mexico is fvcked up and there is no one there but mexicans?  Who the hell do you think is screwing up mexico? Oh?  It must be the mexicans, who leave there in droves to come to the U.S.  Rather than fix their own damn country they want to bring all there chicken crap here and screw up our country.   They have no intention of making things better.  Just sucking the rich mans tit is it.
Apr 23, 2012 1:55PM
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"One needs just one word to explain why stocks are tumbling again today. Europe. Again."

 

Gee...I thought the Street Staff would blame the market drop on the the weather in the Northeast!! 

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