Reports of Greek austerity deal aid Dow

The blue chips fall 60, but the Greek news lets them regain most of their early losses, driven by economic worries. Crude oil falls below its 2010 finish after the US says it will sell oil from its Strategic Petroleum Reserve. Exxon and Chevron sag.

By Charley Blaine Jun 23, 2011 12:34PM
Charley BlaineUpdated: 8:25 p.m. ET

What looked like a disaster for stocks this morning turned into something of a draw at the close on reports that Greece, the European Monetary Union and the International Monetary Fund have agreed to a new austerity plan for the Mediterranean nation.

The news cheered investors and trimmed a loss for the Dow Jones industrials ($INDU) from nearly 235 points in the morning to just 60 points at 12,050. The Nasdaq Composite Index($COMPX), once down as many 41 points, finished up 18 points to 2,687. The Standard & Poor's 500 Index ($INX) was off 4 points to 1,284.

The market had plunged in the morning because of worries about the domestic and global economies.

Then, many traders were startled when the United States and other oil-consuming nations said they would put 60 million barrels of oil on the market to offset the removal from Libyan crude because of that country's civil war. That pushed crude oil (-CL) in New York to $91.02 a barrel, down 4.6% on the day and wiping out all of crude's gains for the year.

Gold (-GC) and silver (-SI) also fell as the dollar rose.

Only nine of the 30 Dow stocks were higher, led by Home Depot (HD), Pfizer (PFE) and Intel (INTC). Decliners were ahead of gainers 1.4-to-1 on the New York Stock Exchange. But the big rebound helped gainers beat decliners 1.2-to-1 on the Nasdaq system.

Article continues below.
A rebound in shares of Apple (AAPL) boosted the Nasdaq. Apple was up 2.7% to $331.23 after falling to as low as $318.12 right on the open.

That set off the Nasdaq's rebound and pushed the Nasdaq-100 Index ($NDX.X) into the black on the day. The Nasdaq-100, which tracks the largest Nasdaq stock, was up 19 points to 2,255. Apple contributed nearly 7.5 points to the index's gain.

Adding to the morning pressure on stocks was news that House Majority Leader Eric Cantor, R-Va., said he was pulling out of budget talks with Vice President Joe Biden, saying they were at an impasse.

Futures trading anticipated late Thursday that stocks will open higher on Friday.

Oracle results disappoint
After the close, shares of tech giant Oracle (ORCL) were off nearly 4.2% to $31.10 from a regular close of $32.46.

The company beat Street estimates on fiscal-fourth-quarter earnings, but sales of computer hardware fell 6% to $1.2 billion. That surprised investors. At the same time, software sales were up 19% to $3.7 billion.

Oracle said it earned 75 cents a share, after one-time charges, on revenue $10.8 billion. The Street had expected 71 cents. Revenue of $10.8 billion was up 13% from a year ago but only in line with Street estimates.

Radio Shack (RSH) shares were unchanged at $13.20 after hours. Standard & Poor's said late today the stock will be replaced in the S&P 500 after June 30 by Marathon Petroleum, which is being spun off by Marathon Oil (MRO). Radio Shack will be part of the S&P Midcap-400Index ($MID.X).

Energy prices -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Crude oil (-CL)

$91.02

$95.41

-11.37%

-0.39%
(per barrel)











Heating oil (-HO)

$2.78

$2.95

-8.89%

9.36%
(per gallon)











Natural gas (-NG)

$4.193

$4.32

-10.14%

-4.81%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.84

$2.97

-9.93%

15.67%
(per gallon)











Brent crude 

$107.26

$114.21

-8.11%

13.20%
(per barrel)











Retail gasoline

$3.61

$3.63

-4.44%

17.58%
(per gallon; AAA)












Potential new supplies slam crude prices
Light sweet crude oil, the benchmark U.S. oil, settled down $4.39, or 4.6%, to $91.02 a barrel, the lowest close since Feb. 18. Brent crude, the benchmark North Sea oil, fell $6.95, or 6.1%, to $107.26 a barrel.

The price drops came on word that the United States was leading an international effort to release 60 million barrels of petroleum reserves to world markets, replacing some of the production lost because of the conflict in Libya. The sellers were probably hedge funds that had used low interest rates to load up on oil or oil futures.

The news came as "a bolt out of the blue," said Alec Young, equity strategist at Standard & Poor's, and amplified the effect on energy stocks, which were the weakest sector of the stock market. Cynics suggested the move was politically motivated.

But there was something more to the move, noted oil consultant Peter Beutel of Cameron-Hanover. The move by the U.S. and the European Union, he wrote clients after today's close, "put traders on notice that they are willing to release oil and can alter the supply dynamics. OPEC (the Organization of Petroleum Exporting Countries) is not the only source of additional barrels of oil."

Exxon Mobil (XOM) was down 1.7% to $78.44. Chevron (CVX) was off 1.7% to $99.36. The two stocks represent 5% of the value of the S&P 500 by themselves, Young noted.

The Energy Select Sector SPDR exchange-traded fund (XLF), which tracks the S&P 500 energy sector, was off 1.1% to $72.30. The ETF is off 10.2% from a closing high of $80.48 on April 29.

The U.S. will release 30 million barrels from its Strategic Petroleum Reserve, which now has some 727 million barrels stored in salt caverns along the Texas and Louisiana coasts. Rising oil prices since midwinter have depressed consumer spending in the United States and elsewhere.

Crude prices shot up starting in February with the eruption of what is basically a civil war in Libya. That shut in Libyan production entirely, taking 1.6 million barrels of low-sulfur crude a day off global markets.

That led to heavy speculation in crude oil futures, particularly Brent crude, the benchmark North Sea crude. Brent peaked at about $127 a barrel on April 8.

Gold settled down $31.80, or 2.1%, to $1,521.60 an ounce and was hovering at that level in electronic trading. Silver was off $1.589 to $35.15 an ounce but was rising after hours. Copper was down 4.1 cents to $4.0475 a pound.

The dollar shot up against the euro and the British pound. Interest rates fell, with the 10-year Treasury yield at 2.909%, down from Wednesday's 2.993%.

We should note that one group of stocks gained from today's energy turmoil: airlines. American Airlines parent AMR (AMR) jumped 5.2% to $6.05. United Continental Holdings (UAL) closed up 4.8% to $25.14.

Wholesale gasoline dropped 13 cents to $283.76 and should push retail prices lower. A penny drop in gas prices returns $40 million a day to U.S. consumers -- or nearly $1.5 billion a year.

Bernanke's worries weigh early on markets
The market was held down by energy and materials stocks, which tend to fall when the dollar rises. And the potential for lower global growth was a heavy weight on the market. Boeing (BA), the largest U.S. exporter, Chevron and Exxon Mobil themselves were responsible for about 30 points of the Dow's loss.

The early sell-off was clearly an extension of the downturn that hit stocks after Bernanke said the problems plaguing the U.S. economy "may be stronger and more persistent" than originally thought. However, he gave no indication the central bank will back another monetary stimulus after the current $600 billion program runs out at the end of the month.

Japanese and European stocks were lower.

Today's jobless claims report confirmed Bernanke's point. The government said claims last week were a seasonally adjusted 429,000, up from 420,000 a week earlier and the 11th week in a row where the widely watched number was above 400,000.

The economy has been giving ground of late to continued weakness in residential real estate, high jobless rates and the broad effects of the March earthquake in Japan on businesses around the world.

A small gain in new-home sales
There was a touch of good news -- a report showing new-home sales fell 2.1% to a seasonally adjusted annual rate of 319,000 units. That was slightly better than expected and up 13.5% from May 2010's rate of 281,000 units. The inventory of new homes for sale was 166,000, a 6.2-month supply, and down 23% from a year ago.

The reason the number is just a touch of good news is that new-home sales have averaged 678,000 units a year since records were first tabulated in 1963. Moreover, the May reports shows sales running at 23% of the peak level in 2005.

Nonetheless, the report boosted homebuilding shares. Lennar (LEN), which reported better-than-expected second-quarter profits, was up 2.3% to $18.51. Ryland (RYL) ended up 2.9% to $17.65. Pultegroup (PHM) had added 1.2% to $7.58.

Manufacturing weakens in China and Europe

Global economic growth was also in question following weak readings on separate purchasing managers’ surveys for China and in continental Europe.


Sluggish growth in Europe was particularly difficult for the market to swallow as eurozone leaders struggle with ways to stabilize Greece. On Thursday, European Central Bank President Jean-Claude Trichet rated risks to financial stability in the eurozone as "red," according to a Bloomberg report.


Short hits from the markets -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.01%

0.01%

-80.00%

-91.67%
5-year Treasury note 

1.45%

1.54%

-13.98%

-27.98%
10-year Treasury note

2.91%

2.99%

-4.56%

-11.92%
30-year Treasury bond

4.16%

4.22%

-1.30%

-4.61%
Currencies











U.S. Dollar Index

75.904

75.188

1.62%

-4.27%
British pound

$1.59

£1.61

-3.16%

2.20%
(in U.S. $)











U.S. $ in pounds

£0.63

£0.62

3.26%

-2.15%
Euro in dollars

$1.41

$1.43

-2.02%

5.70%
(in U.S. $)











U.S. $ in euros

€ 0.71

€ 0.70

2.06%

-5.39%
U.S. $ in yen 

80.84

80.30

-0.97%

-0.65%
U.S. $ in Chinese

6.49

6.46

-0.19%

-1.90%
yuan











Canada dollar

$1.019

$1.027

-1.47%

1.55%
(in U.S. $)











U.S. dollar 

$0.982

$0.982

1.48%

-1.52%
(in Canadian $)











Commodities











Gold (-GC)

$1,520.50

$1,553.40

-1.06%

6.97%
(per troy ounce)











Copper (-HG)

$4.041

$4.088

-3.27%

-9.13%
(per pound)











Silver (-SI)

$35.0020

$36.7390

-8.62%

13.14%
(per troy ounce)











Wheat (-ZW)

$6.4900

6.3825

-17.03%

-18.29%
(per bushel)











Corn (-ZC)

$6.8050

6.775

-8.96%

9.32%
(per bushel)











Cotton 

$1.6455

1.6122

3.71%

13.63%
(per pound)











Coffee

$2.4770

2.4375

-6.39%

2.99%
(per pound)











Crude oil (-CL)

$91.02

$95.41

-11.37%

-0.39%
(per barrel)











120Comments
Jun 23, 2011 12:55PM
avatar
Since Bernanke's comments 24 hours ago the market has fallen almost 300 points. This guy has absolutely no clue. The only way out is to end outsourcing, close overseas bases, bring home ALL the troops, and stop ALL foreign aid. Then use that money to build the USA into a economic powerhouse.
Jun 23, 2011 2:22PM
avatar
When the Chairman of the Federal Reserve admits on national television that he hasn't got a clue how to fix our economic and housing ills, it sounds like we're already screwed.  It's just a matter of which day our dollar is worth four cents! Liberals and conservatives better get their crap together real soon to avoid another Greece in this country!
Jun 23, 2011 1:48PM
avatar
This may be the only thing Glen Beck has ever been right about...it IS time to go to DC with "torches and pitchforks" and DEMAND that something be done to produce WORK and JOBS instead of more profits for large multinational corporations. How about some work for the small contractors, guy's that would/could employ thousands instead of multinationals that employ a relative handful of US workers but tens of thousands overseas.
Jun 23, 2011 1:21PM
avatar
The best advice for Americans is to IGNORE ANYTHING our "leaders" tell us, concerning the state of our Nation or the economies condition, and live our lives the way we know is right. The Founding Fathers created this Nation to be strong, honest and true...if they could see what we have become, they would roll over in their graves. This Country and the way it is run is NOT what they had in mind when they wrote the Constitution and the Declaration of Independence.!!!
Jun 23, 2011 2:15PM
avatar

Until we get someone to steer the ship and knows what he is doing this country will continue to falter. Unemployment has risen since Obama has been in office, Why? Because the only thing coming out of his mouth is taxes. Corporations can take their manufacturing overseas with a whole lot less taxes, healthcare issues and oversight from the government. He raves about the jibs he has created, half of all the hiring was from McDonalds. Let him live on minimum wages (frankly that is all he desrves) Bring pride back to America, Vote out Obama in 2012. If you think that this is racist then I am for the love of my country and fellow human being no matter what race. There was a article the other day from social security stating 1.8 million people who have no unemployment benefits left have filed for disability and are not counted on the unemployment roles. This president has done more to destroy this country in the short time he has been in office than any other president with maybe the exception of Jimmy Carter. What would have happened if the Republicans had not voted against the dream act? 33million more illegal immigrants on the dole. I truly beleive he is out to destroy our country because nobody can be that stupid.

AMERICA,

IN DEBT

NO MONEY,

NO JOBS,

NO RESPECT,

NO FUTURE

Jun 23, 2011 1:59PM
avatar
According to Mort Zuckerman's article yesterday, we have the highest number of idle people in this country since the great depression. I am waiting for the government to come out with the truth on real unemployment - 20% is much more accurate than 9.2%. Hitting the oil reserves, will have little real impact on pricing since the amount we are releasing is equal to 3 days of supply. We need leadership and I don't care what party they are from. This current idiot combined with the last idiot should be considered the dynamic duo of destruction
Jun 23, 2011 2:06PM
avatar
I'm 57 yrs old and for years my 82 year old father has been telling me " son, the average working middle class people like us, to uncle sam, were nothing but a faceless SS#.
Jun 23, 2011 2:18PM
avatar

Beware Of Obama Zombas!

 

Obama never talks about the economy because he doesn't know why or what to do.

His pictures usually show him with his head tilted in the air. This is the same posture of someone in a pool trying to keep his head above water.

 

Obama is in way over his head!

 

I can't wait until this afternoon and evening when the Zombas on TV will be touting him a genius!

Jun 23, 2011 1:48PM
avatar
For all you anti GOP, Blame Bush for all the unemployment etc etc, what do you think the unemployment rate will be when all those reservists on active duty return home?  Again Obama proves he can't see the big picture. He is a single thread person who couldn't lead a group of scouts on a camping trip.  
Jun 23, 2011 1:19PM
avatar

Hmmm...

 

Yes, the wars cost 1 trillion....but being Odumba is blowing 1.5 Trillion every year thats small potatoes...

 

Still if we end the war, we can use the money to reduce Mr. Odumba's deficit to 1.3 Trillion evey year...

 

The Donkeys just don't get it...   STOP SPENDING...

Jun 23, 2011 2:02PM
avatar
Looks like SAAB may not be able to meet their payroll and are talking about shutting down.  I don't understand why they just don't call our prez and ask for some bailout money...he's good at bailing out failing auto companies.
Jun 23, 2011 2:03PM
avatar
Greece will Default Today and start the Chain Reaction ! The Domino Effect has started and OFF THE CLIFF WE GO !!!!!!!!!!!!!!!!!!!
Jun 23, 2011 1:28PM
avatar
15 million ILLEGAL'S deported and look at all the jobs. Problem solved. If the Gov. had the guts we would be out of this mess!
Jun 23, 2011 3:48PM
avatar
Obama and any other president to come can spew all the BS they want. The 2 party system in this country is a joke. Until we get a congress and senate that at least can make an attempt to work together for us, it's all just useless words.
Jun 23, 2011 2:43PM
avatar
I'm a third generation Democrat who voted and worked for Obama (stuffing envelopes and walking precincts) but since around June 1st I have doubts that he can be RE-elected, which would be the second Demo prez to do so since FDR in '44.  Clinton was the first, vs. Sen Dole at age 73 in '96.  11/'12 will be about the economy and the wars including our troops in Yemen or perhaps Pakistan.  If the unemployment rate is around 8% or higher,  I cannot see how he can serve a second term.      
Jun 23, 2011 2:43PM
avatar
But, but, but...I thought we were in a recovery?  Why doesn't someone suggest that incentives to business be put in place to hire unemployed workers (i.e. a tax credit).  Nothing will get better until unemployment improves.
Jun 23, 2011 1:02PM
avatar
We have spent one TRILLION us dollars on these 2 wars.  If we have not made significant measurable progess in 10 years, it is time to pack up and go home.  And honestly, even what "progress" the DOD states, it is not worth it.  Time to go, fix our many problems on the home front!!
Jun 23, 2011 1:23PM
avatar
Everyone is now blaming the economic decline - to some degree - including Obama's guy Ben Bernanke - on the problems with residential real estate. The values of homeowners investments are tanking. Apparently, that is OK with our current leadership on Pennsylvania Avenue. But consider - he bailed out the well connected and friends on Wall Street, auto makers, insurance companies, banks, unions, teachers, local governments, etc. It seems everyone who matters to Obama got help. The individual citizens of this country are getting left out of the bailouts and are being crushed by the decline in their homes values. Meanwhile, the perpetrators of the housing bubble - bankers and mortgage compnaies get bailed out and saved. When is this guy going to take notivce and do somehting to help the peons he is supposed to be leading. His lack of interest in the working man and small business in this country is astounding. November 2012 can't come soon enough.
Jun 23, 2011 1:08PM
avatar
I don't consider oil falling 5% in one day a BAD thing.
Jun 23, 2011 1:33PM
avatar
time to take over our government as they seem to all be morons,
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