Dow falls 49 after Fed minutes disappoint
The blue chips are briefly down as many as 119 points as Federal Reserve officials see the current slowdown as transitory. They will act if conditions deteriorate. Marriott warns about growth in Asia. Supervalu suspends its dividend.
Updated: 6:40 p.m. ETStocks abruptly slumped after minutes from the June 19-20 Federal Reserve meeting offered few hints that the Fed is preparing a major new initiative to boost the economy in the near future. The Dow Jones industrials ($INDU) tumbled as many as 119 points before a sizable rebound set in.
At best, the minutes show, the Federal Open Market Committee would move if the domestic economy goes into a serious tailspin. That wasn't even close to happening at the time of the meeting. While the FOMC, the Fed's policy-making body, saw that solid growth in the first quarter faded in April and May, the members judged that the slowness might be transitory.
But there were big risks to that outlook: the "fiscal and financial strains in Europe" and what might occur if Congress can't agree on tax and spending policies before January when the Bush tax cuts are to expire and massive spending cuts could kick in.
Stocks had traded basically flat ahead of the release of the minutes and dropped quickly after they were made available.
The Dow closed down 49 points to 12,605. The Standard & Poor's 500 Index ($INX) was down -- barely -- at 1,341, and the Nasdaq Composite Index ($COMPX) dropped 14 points to 2,888.
Article continues below.
The Nasdaq-100 Index ($NDX) fell 15 points to 2,571.
The S&P 500, with its loss of two hundredths of a point, and the Dow suffered their fifth losses in a row, their longest losing streaks since falling for six straight sessions between May 11 and May 18. The Nasdaq ended with its fourth straight loss, its longest losing streak since falling for five straight days May 14-18.
But the declines have not been backbreakers. The Dow and S&P 500 are off 2.3% since July 3; the Nasdaq has been hit harder, down 3% since July 5.
The big report on Thursday is the government's weekly report on jobless claims. Futures trading suggests a modestly higher open for stocks.
Warnings from Marriott and Supervalu
But the market may be worried by a warning from Marriott International (MAR) that demand growth in Asia and the Middle East may be slowing, particularly among its luxury hotels, which include the Ritz-Carlton, Marriott Resort and Renaissance chains. Marriott's domestic business, however, is expected to grow 6% to 8% for the year. Marriott earned 42 cents a share, up from 37 cents a year ago.
A second issue may be supermarket chain Supervalu (SVU), whose shares fell 26.3% after hours to $3.90. Shares finished the regular session at $5.29, up 14 cents. The company has struggled against increasing competition from Wal-Mart Stores (WMT), Target (TGT) and others.
The company, operator of Albertsons, Jewel-Osco, Save-A-Lot and other stores, suspended its dividend and said it was reviewing its options. That could mean it puts itself up for sale.
The company saw fiscal-first-quarter earnings fall 45% to 19 cents a share from a year ago. Revenue fell 4.7% to $10.59 billion and missed the Street estimate of $10.6 billion.
Energy, financials lead the market
The market was boosted by gains in energy and financial stocks. Bank of America (BAC), Exxon Mobil (XOM), Chevron (CVX) and JPMorgan Chase (JPM) were among the top five performers among the 30 Dow stocks.
Technology stocks drooped with Apple (AAPL), Google (GOOG), Microsoft (MSFT) and Qualcomm (QCOM) all lower. Retail and material shares also moved lower. (Microsoft publishes MSN Money.)
A big exception: Hewlett-Packard (HPQ) was up 58 cents to $19.69 on the strength of winning a number of new contracts. One is a contract to automate the management and quality control of the information technology networks for Russian Railways.
JPMorgan shares were up 34 cents to $34.59 in part because The Wall Street Journal said the banking giant will announce Friday it is taking back bonuses given to executives involved in the big trading loss disclosed in May. The announcement is expected as part of Morgan's second-quarter earnings report.
Meanwhile, electronic retailer HHGregg (HGG) shares were down $4.20 to $7.34 after the appliance and electronics company slashed its full-year forecast and cut its guidance for the fiscal first quarter. The shares are off 50% so far this year. Radio Shack (RSH) was off a penny to $3.90, and Best Buy (BBY) dropped $1.77 to $19.37.
Health care stocks were mostly higher after the House of Representatives voted for the 32nd time to repeal the Healthcare Reform Act. The vote is symbolic. The Senate probably won't take the bill up, and President Obama has vowed to repeal the legislation.
The Health Care Select Sector SPDR (XLV) exchange-traded fund was off 3 cents to $37.62. The ETF tracks the stocks in the S&P 500 health care sector. Thirty-two of the 52 stocks in the sector were higher, led by Boston Scientific (BSX), up 11 cents to $5.62.
| Energy prices -- New York close | ||||||||||||
| Wed. | Tues. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $85.81 | $83.91 | 1.00% | -13.17% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $2.7618 | $2.7195 | 1.92% | -5.23% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $2.8530 | $2.7370 | 1.03% | -4.55% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $2.7689 | $2.7469 | 5.21% | 4.20% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $100.23 | $97.97 | 2.48% | -6.66% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.3830 | $3.3810 | 0.89% | 3.27% | ||||||||
| (per gallon; AAA) | ||||||||||||
What the Fed minutes show
So far, the Fed has said basically that it stands ready to do something about the economy if conditions warrant. But the central bank hasn't defined what those conditions might be. The minutes released today offer one condition: If overall inflation drops below 2% a year for an extended period.
The minutes also suggest talk is building about letting interest rates remain at "exceptionally low levels" beyond late 2014. There's been a fair amount of speculation that the Fed may push that into 2015. The Fed's all-important interest rate target -- the federal funds rate -- is at 0% to 0.25%.
The Fed is scheduled to meet again July 31 and Aug. 1.
The expectation that the Fed might act increased after last week's jobs report that showed nonfarm payrolls rising a seasonally adjusted 80,000, less than expected. In addition, reports on manufacturing and consumer confidence have suggested a weakening economy.
Last week, the European Central Bank cut its base rate, and the Bank of England announced its own round of quantitative easing. The Fed itself is buying $44 billion a month in short-term securities and selling an equal amount of longer-term bonds through the end of the year.
Crude oil jumps, gold slips
Crude oil (-CL) settled up $1.90 to $85.81 a barrel. Brent crude was up $2.42 to $100.59. The Energy Department reported that crude supplies dropped and refineries operated at the highest rate in almost five years.
The national average price of regular unleaded gasoline was at $3.383 a gallon, up slightly from Tuesday's $3.381 and up from $3.358 on Friday.
Gold (-GC) slipped $4.10 to settle at $1,575.70 an ounce.
Interest rates were a touch higher, with the 10-year Treasury yield hitting 1.503%, up from 1.498% on Tuesday. The dollar was higher against major currencies. The euro fell to $1.2223 from Tuesday's $1.2256.
The Agriculture Department cut its corn-harvest estimate by 12% and said inventories next year will be smaller than forecast in June as the worst Midwest drought since 1988 erodes prospects for a record crop. Corn (-ZC) for December delivery jumped to as high as $7.49 a bushel after the report was released, but profit-taking pushed the price back to $7.04 a bushel at the close, down 13.5 cents.
Microsoft may be sellling its stake in MSNBC.com
After the close, The Daily Beast's Howard Kurtz reported that Microsoft and NBC have decided to end their partnership operating the MSNBC.com news site, which is based on Microsoft's corporate campus in Redmond, Wash.
Kurtz's report suggest NBC will buy out Microsoft's stake and will continue to operate the site as NBCNews.com.
A renegotiation has been expected since the companies ended their partnership operating the MSNBC cable channel in 2005 and NBC was acquired by Comcast in 2009.
| Short hits from the markets -- New York close | ||||||||||||
| Wed. | Tues. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.0900% | 0.080% | 12.50% | 800.00% | ||||||||
| 5-year Treasury note | 0.628% | 0.619% | -13.85% | -24.34% | ||||||||
| 10-year Treasury note | 1.498% | 1.498% | -9.70% | -19.94% | ||||||||
| 30-year Treasury bond | 2.589% | 2.594% | -6.30% | -10.38% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 83.728 | 83.559 | 2.42% | 3.98% | ||||||||
| British pound | 1.5509 | 1.5523 | -1.24% | -0.19% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.645 | £0.644 | 1.26% | 0.19% | ||||||||
| Euro in dollars | $1.22 | $1.23 | -2.98% | -5.47% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.816 | € 0.816 | 3.07% | 5.79% | ||||||||
| U.S. $ in yen | 79.81 | 79.40 | 0.08% | 3.51% | ||||||||
| U.S. $ in Chinese | 6.39 | 6.36 | 0.34% | 1.07% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $0.981 | $0.978 | -0.14% | 0.01% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $1.020 | $1.022 | 0.14% | -0.01% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,575.70 | $1,579.80 | -1.78% | 0.57% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $3.448 | $3.398 | -1.40% | 0.33% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $27.0230 | $26.8820 | -2.13% | -3.20% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $8.2625 | $8.2125 | 9.11% | 26.58% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $7.0400 | $7.175 | 10.91% | 8.89% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $0.7102 | 0.7072 | -0.43% | -22.53% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $1.847 | 1.845 | 8.20% | -19.57% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $85.81 | $83.91 | 1.00% | -13.17% | ||||||||
| (per barrel) | ||||||||||||
>>>>> "fiddling, while Rome burns."<<<<
so very true. a total lack of ideas from the entire gang in office.
first, obama spends time on the health care plan while our economy dies. THEN the republicans spend time trashing the health care plan while the economy dies.
it's the modern way of re-arraigning deck chairs
After yesterday's action in the House for the umpteenth time......
I think I'm finally convinced to never vote Republican again...
Actually all INCUMBENTS should be thrown out....
But the REpublicans have been the ROOT of EVIL....
And they are sitting "fiddling, while Rome burns."
I have had enough....
We have accomplished very little the last 4 years...And it all falls, on the shoulders of CONGRESS.
Ron Paul will be Obama's challenger. Romney isn't going to make it. Check out the TV footage of his botched speech to NAACP conventioners yesterday. He threw a hot topic out and stood there with a stupid grin while being booed. Remember the show "Lie to me"? READ HIS FACE... in his mind he was saying: "you will all get yours after I am in power"... We can't take any chances of a psycho in the WH. Come on, Nebraska, get a Paul win of your delegates and get the CORRECT man in front of the podium.
I'll take a good man who can spontaneously answer a question consistently over a bad actor who flip flops regularly and has yet to specifically define his intentions.
"W's deficits (which were made worse) because of 2 unnecessary wars and another entitllement, Medicare Part D to which all those collecting contributed Zero, averaged around 380 billion a year."
Just these? He spent EIGHT years in Office rigging us for this catastrophe. Nearly all the debt we are experiencing now originated in Dubya's era.. which was a continuance of intiatives bungled during his father's era. History will know Bill Clinton for his achievements, the Bushes as failures. I don't think we can define Obama yet... who has time? Hard to get a handle on it during the greatest class-divide and rampant financial corruption period-- ever.
"Stop the tax breaks for those so called "Job Creators". I see that the only place they create jobs are in Switzerland, the Cayman Islands or Bermuda! Tax the heck out of any company that produces goods overseas and sells them here!"
You'd never see goodness printed in our controlled media but Senators Debbie Stabenow- D and Carl Levin- D have managed to create legislation that ends this corruption. We all complain about Romney and his Bain offshore accounts, but Haley Barbour- R bragged about Republican Retirement Account Funds in offshores having more than $5 million each in them! Stabenow got farm subsidies stopped and is working on a ban of overseas jobs that came from here. Levin got legislation passed to outright ban offshore accounts. Notably, GOP set up "global" entities for it's puppets to circumnavigate that new law. Know the enemy folks...
First... I'd like the GOP to write checks to every American equal to the time wasted and cost for 30 attempts to repeal the HealthCare Act. We pay our taxes to get good representation. I would call the Party of NO cooperation-- grossly negligent and wholly irresponsible. They need to leave Congress as soon as TODAY.
Second... Austerity measures in Spain brought whole scale protests and riots in the streets but it did nothing to do away with grossly negligent and wholly irresponsible banks (there's a pattern here). It may be a new day but it's a re-occurring problem we seem to be unable to correct. Close the banks, terminate all personnel up through the boards, reconcile, regulate and divest to eliminate the TBTF disease.
Third... The media is strangely quiet about JPM Chase. Financial data indicates $4 Trillion wealth but only $50 Billion liquid assets. They will owe fines and penalties for the LIBOR Scam, MG Fund Scam and the growing lossess stemming from that bad derivatives (scam) investment. How soon before a big bank goes bust and dumps that toxic crap on the rest of us?
Davidapbarber...
Clinton never balanced the budget or ran a surplus. Liberal nonsense. The Natioanl debt incresed in EVERY YEAR CLINTON was in office. If you have a balanced budget or surplus as you claim you don't need to borrow. So you claim is false or an out right lie. Mr. Clinton did however, come close in 2 years thanks to a Republican Congress, and Revenuse that poured in from the dot.com bubble. When in his last year the bubble burst, and the NASDAQ went from 5050 to under 2300, those revenues disappeared. Clintons last year left W wiith a 220 Billion deficit upon taking office.
W's deficits (which were made worse) because of 2 unnecessary wars and another entitllement, Medicare Part D to which all those collecting contributed Zero, averaged around 380 billion a year.
The imbecile that we have now is running deficits between 1.2-16 Trillion, 4 times higher.
The debt was 10.2 Trillion on Jan 20th, 2009 the day Obama took Office. Today, it stands at 15.8 trillion. So your entire comment comes across a that of Donkey Party Shill... i.e almost entirely FALSE.
Does anyone remember that when Clinton left office we were in the black. When Bush took office he gave everything away and put this country 13Trillion dollars in debt? How can we blame Obama not that he must now take responsibilty for this mess. If we elect anoth republican we will be screwed.
How short of a memory people have. Look to past as well as the future.
All politicians local and fereral are wasting money and nothing can be done.
The "best" is yet to come. It will not be fun! We asked for it and we 'have' it. Never ever elect someone as president that is a known socialist. He is in the process of destoying our nation and is not even born here. This will all come out. The Clinton's....could have vetted him at any time.
Now, that is a trip in itself! How is this "world' order going now? Sure, the Bushs' know ****, also. Time for a complete revampimg and get the Chicago thugs out....did I say Kennedy? At least he had guts!
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