Dow off 69; stocks fall back on China worries

Updated: 7:47 p.m. ET

Stocks were lower -- but well off their lows of the day -- on new worries about the strength of the Chinese economy. Investors were also disappointed with a report on housing starts in February, but building permits were stronger than expected.

The Standard & Poor's 500 ($INX) briefly dropped under 1,400 right after the open. On Thursday, the index had closed above 1,400 for the first time since June 2008.

The market pullback was fairly broad, although financial and utilities stocks in the S&P 500 were showing gains. Energy, industrial and metals stocks were especially weak.

Apple (AAPL) recovered from an early loss and finished at a new closing high of $605.96, up $4.86. It hit an all-time intraday high of $606.90. Walt Disney (DIS) was off 20 cents to $43.24 after announcing a $200 million write-down from the bust of its science-fiction epic "John Carter." After the close, Oracle (ORCL) earnings appeared to win investor approval.

Crude oil (-CL) in New York and gold (-GC) were lower in the selling. So were interest rates.

The Dow Jones industrials ($INDU) closed down 69 points to 13,170; the blue chips had been down as many as 115 points. The S&P 500 was off 4 points to 1,406. Investors keeping the index above 1,400 was a big win for bulls. The Nasdaq Composite Index ($COMPX) fell 4 points to 3,074. The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, was up 4 points to 2,738, largely because of Apple.

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Crude oil settled down $2.48 to $105.61 a barrel. Brent crude was off $1.35 to $124.36, after falling to as low as $120.97. Retail gasoline nationally averaged $3.846, according to AAA's Daily Fuel Gauge report, up from $3.842 on Monday.

One reason for the oil decline was the China news. Another factor: Saudi Arabia, the world's biggest crude exporter, repeated its pledge to make up for lost Iranian output. That eased concerns of a supply squeeze in an oil embargo against Iran.

Gold settled down $20.20 to $1,647 an ounce. Silver (-SI) settled down $1.121 to $31.834 an ounce. Copper (-HG) was off 7.85 cents to $3.8305 a pound. Gold is down 3.8% this month, although up 5.1% for the year; silver is off 8.1% in March but up 14% for the year. Copper is off 1.3% this month but up 11.5% on the year.

Interest rates have been volatile. The 10-year Treasury yield started the day lower, reversed course and hit 2.397%, the highest level since Aug. 5. Then, the yield dropped back to 2.372% at the close, down slightly from Monday's 2.379%.

The dollar was higher against major currencies.

Coming Wednesday: earnings from credit-card company Discover Financial Services (DFS), food processor General Mills (GIS) and office-furniture maker Herman Miller (MLHR).

Futures trading suggests a flat open for stocks.

Oracle earnings win some cheers
Oracle (ORCL) shares closed up 34 cents to $30.10 and moved 1.6% higher to $30.58 after hours. The company earned 62 cents a share after one-time charges in the fiscal third quarter, up from 54 cents a year ago. Revenue was up 3% to $9.06 billion.

The Street had expected 56 cents a share in earnings and revenue of $9.02 billion.

The stock is up more than 15% this year, but it's off 18.6% from a May 2011 peak.

New software licenses, a key measure of success, were up 7% to $2.37 billion. But hardware sales were off 16% to $869 million. Support revenue for hardware sales was off 4% to $604 million. The hardware business came to Oracle when it acquired Sun Microsystems.

Oracle has been downgraded several times in the last two months; analysts are concerned over its ability to stop competition from cloud providers Salesforce.com (CRM) and Workday from eating into its traditional business, as well as the deadweight that the Sun Microsystems deal has so far proved to be.

Separately, Hewlett-Packard (HPQ) shares fell 36 cents to $23.98 but were up slightly after hours. The company is combining its personal-computer unit with the division that sells printers as part of an effort to cut costs and simplify how its businesses run, sources told Bloomberg News said. Todd Bradley, who runs the PC division, will become head of the enlarged unit, while Vyomesh Joshi, who runs the business focused on imaging and printing, will depart.

Energy prices -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Crude oil (-CL)			$105.61			$108.09			-1.36%			6.86%
(per barrel)
Heating oil (-HO)			$3.2367			$3.2613			0.96%			11.07%
(per gallon)
Natural gas (-NG)			$2.3350			$2.3510			-10.74%			-21.88%
(per mil. BTU)
Unleaded gasoline (-RB)			$3.3631			$3.3678			3.25%			26.56%
(per gallon)
Brent crude			$124.12			$125.71			1.19%			15.59%
(per barrel)
Retail gasoline			$3.8460			$3.8420			3.08%			17.40%
(per gallon; AAA)

Lower steel demand in China is a worry
The sell-off started when an executive at BHP Billiton (BHP), the big Australian mining company said China's economy is cooling. Steel demand is flattening as well.

Growth in China's demand for iron ore will drop "to single digits, if it is not already there," Ian Ashby, president BHP's iron ore division, told reporters at a mining conference in Perth, Australia.

His comments were echoed by David Joyce, managing director of expansion projects at Rio Tinto (RIO), the British mining company, who conceded that Chinese steel demand is softening, although he sees growth accelerating later this year.

In the last year or so, China has been trying to reduce the inflationary pressures in its economy with higher interest rates and other measures.

Those comments were enough to send stocks in China and Hong Kong lower. European stocks also fell on the day. American stocks were affected as well. Japan's stock market was closed.

BHP Billiton shares were down $2.50 to $73.01 in New York. Rio Tinto shares in New York dropped $2 to $55.15. Cliffs Natural Resources (CLF), the U.S. iron-ore producer, was off $1.76 to $71.41. Freeport-McMoRan Copper & Gold (FCX), whose Grasberg mine in Indonesia sends most of its output to China, was off for most of the day but recovered to a 1-cent gain to $39.15.

Construction-equipme​nt maker Caterpillar (CAT) was off $2.97 to $110.76, subtracting some 22 points from the Dow by itself. Rivals Joy Global (JOY) and Manitowoc (MTW) were off $3.44 to $75.92 and 30 cents to $15.06, respectively.

Housing starts were off, but building permits jump
The headline number was a disappointment. Housing starts in February fell 1% from January to an annualized 698,000 units.

But the real story was building permits, which were up 5% from January and 34% from a year ago to an annualized 717,000 units. It was the best month for permits since October 2008.

Permits for apartments were up 3.3% from January and 59.9% from a year ago as many would-be buyers are opting for rentals rather than risk homeownership.

But single-family permits were up 5% from January and 23.6% from February to an annualized 472,000.

These are not huge numbers. Starts topped at 2.2 million units in 2005; permits topped out at 2.3 million units in September 2005. But they are an improvement. Permits are up 40% from their lows in 2009.

Still, said economist Patrick Newport of IHS Global Insight, "This report is one of the more encouraging new construction reports we have seen in the last four years."

Despite the cheer of economists, most homebuilding stocks were lower. Ryland (RYL) fell 18 cents to $19.89. D.R. Horton (DHI) fell 19 cents to $15.74. But PulteGroup (PHM) closed up 5 cents to $9.21.

On Wednesday, the National Association of Realtors issues its February report on existing-home sales. Nomura Securities expects a seasonally adjusted annual rate of 4.74 million units. IHS Global Insight expects a sales rate of 4.6 million units. 

Also, the Mortgage Bankers Association will release its weekly report on mortgage applications. The

Multinational stocks get hit
The Dow's decline today was not just due to Caterpillar or Caterpillar or Disney.

Four stocks -- Caterpillar, IBM (IBM), United Technologies (UTX) and Chevron (CVX) -- combined for more than 56 points of the blue chips' loss today.

Chevron fell $1.62 to $109.08 in part because of oil prices. But shares also fell because of worries that Brazil will press criminal charges from a November oil spill from a drilling site about 230 miles northeast of Rio de Janeiro. The charges would be made against executives from Chevron and from offshore drilling contractor Transocean (RIG). Transocean is best known for the 2010 explosion on its Deepwater Horizon that set off the BP oil spill in the Gulf of Mexico. Eleven people died in the explosion.

The Brazil spill is less than 1% the size of the BP spill, which spewed 4.9 million barrels of oil before it was capped in September 2010.

A bias to the downside
Only 12 of the 30 Dow stocks were higher, led by Bank of America (BAC) and Cisco Systems (CSCO).

Meanwhile, 145 S&P 500 stocks were higher, led by Tiffany (TIF) and Amazon.com (AMZN).

Tiffany shares were up $4.59 to $73.27. The luxury jeweler forecast 2012 earnings per share of at least $3.95. The consensus Wall Street estimate had been $3.92. The company also estimated 2012 sales of $4 billion, beating the average analyst estimate of $3.9 billion.

Amazon was up $6.81 to $192.33. Investors liked the company's $775 million purchase of Kiva Systems. Kiva makes robotic systems used in the shipping and logistics centers of the type that Amazon operates around the globe.

Amazon.com was the leader among Nasdaq-100 stocks, followed by NetApp (NTAP), up $1.25 to $45.31. Twenty-seven stocks in the index were higher, mostly because of the gains of Apple and Amazon.com.

The laggards were First Solar (FSLR), down $1.21 to $27.46. The administration imposed preliminary duties of as much as 4.73% on solar-energy equipment imported from China, a rate that an analyst said may have little impact on the industry.

Adobe Systems (ADBE) fell  $1.35 to $33.16 after missing Street estimates on fiscal-first-quarter​ earnings.

Short hits from the markets -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.1000%			0.090%			25.00%			900.00%
5-year Treasury note			1.200%			1.191%			37.14%			44.58%
10-year Treasury note			2.372%			2.379%			19.98%			26.78%
30-year Treasury bond			3.457%			3.481%			12.02%			19.66%
Currencies
U.S. Dollar Index			79.825			79.712			1.31%			-0.87%
British pound			1.5865			1.5896			-0.43%			2.11%
(in U.S. $)
U.S. $ in pounds			£0.630			£0.629			0.43%			-2.07%
Euro in dollars			$1.32			$1.32			-0.86%			2.08%
(in U.S. $)
U.S. $ in euros			€ 0.756			€ 0.755			0.87%			-2.03%
U.S. $ in yen			83.89			83.40			3.10%			8.81%
U.S. $ in Chinese			6.34			6.32			0.42%			0.30%
yuan
Canada dollar			$1.009			$0.987			-0.31%			2.86%
(in U.S. $)
U.S. dollar			$0.992			$0.987			0.31%			-2.78%
(in Canadian $)
Commodities
Gold (-GC)			$1,647.00			$1,667.30			-3.76%			5.12%
(per troy ounce)
Copper (-HG)			$3.831			$3.909			-1.26%			11.48%
(per pound)
Silver (-SI)			$31.8340			$32.9550			-8.11%			14.04%
(per troy ounce)
Wheat (-ZW)			$6.4250			$6.5225			-3.82%			-1.57%
(per bushel)
Corn (-ZC)			$6.4750			$6.635			-1.60%			0.15%
(per bushel)
Cotton			$0.8872			0.899			-1.90%			-3.23%
(per pound)
Coffee			$1.8360			1.835			-9.67%			-20.05%
(per pound)
Crude oil (-CL)			$105.61			$108.09			-1.36%			6.86%
(per barrel)