Stocks fall before Fed decision

The central bank is expected to announce a plan to stimulate the economy. US companies added 43,000 positions in October. The service sector grows more than forecast. Factory orders rise.

By TheStreet Staff Nov 3, 2010 8:04AM

TheStreetBy Melinda Peer, TheStreet

 

Updated at 1:08 p.m. ET

 

Stocks were falling after better-than-expected job growth in October failed to boost sentiment among investors awaiting results from the Federal Reserve's policy meeting.

 

At 1:08 p.m. ET, the Dow Jones Industrial Average ($INDU) was down by 11 points, or 0.1%, at 11,178. The S&P 500 ($INX) was down by 2.2 points, or 0.2%, at 1,191. The Nasdaq ($COMPX) was losing 7.4 points, or 0.3%, at 2,526.

 

Trading is likely to be light ahead of the Federal Open Market Committee's rate decision at 2:15 p.m. ET. While the overnight lending rate is expected to be unchanged, investors expect the central bank to announce plans to buy back assets to reduce rates. Analysts predict the Federal Reserve will buy $500 billion in bonds.

 

"My hope is that the Fed will have language in there saying that the Fed will continue to do this as long as necessary," said David Chalupnik, the head of equities at First American Funds. "If it does appear to be a one-time effort, then that might be somewhat disappointing to the market."

 

Shares across the basic materials and capital goods sectors were showing the largest declines, while consumer cyclical, financial and transportation stocks held mild gains. American Express (AXP), DuPont (DD) and Alcoa (AA) were the Dow's biggest laggards, while Cisco Systems (CSCO), Bank of America (BAC) and Hewlett-Packard (HPQ) showed the best performance.

 

Automatic Data Processing (ADP) said U.S. companies added 43,000 jobs in October, more than double the 20,000 economists had expected. The number of positions lost in September was revised to 2,000 from 39,000.

The ADP report came hours after Republicans took control of the House of Representatives by promoting plans to add jobs. The government will issue its employment report Friday.

 

The Institute for Supply Management's October services index rose to a 54.3 from 53.2 in September, surpassing expectations for a reading of 53.4.

 

The Commerce Department said factory orders rose 2.1% in September, topping forecasts for growth of 1.7%, according to Briefing.com. Orders were unchanged in August.

 

In company news, shares of Hartford Financial Services (HIG) were up 8.4% to $25.39 after the insurer posted a third-quarter profit yesterday after a year-earlier loss. The company's core earnings of $1.43 a share beat estimates for 97 cents, according to Thomson Reuters.

 

Aetna (AET) shares were climbing 2.6% to $30.75 after the health insurer's third-quarter earnings rose 53% to 84 cents a share, topping expectations for a profit of 67 cents.

 

Rival WellPoint (WLP) also beat expectations, with earnings of $1.74 a share on sales of $14.3 billion. Analysts had expected earnings of $1.57 a share on sales of $14.2 billion. The company's shares were down 1.4% at $54.96. 

 

PulteGroup (PHM) shares were dropping 3.2% to $7.81 after the homebuilder posted a third-quarter loss of $2.63 a share. Sales fell 3% to $1 billion from $1.1 billion a year earlier. Consensus estimates, which exclude nonrecurring items, called for a loss of 5 cents a share, according to Briefing.com.

 

Time Warner (TWX) shares were losing 2% at $31.75 after the media company's third-quarter sales fell short of forecasts. Revenue rose 2% to $6.38 billion, but analysts had expected sales of $6.4 billion.

 

Lloyds Banking (LYG) named Antonio Horta-Osorio, the head of Banco Santander's (STD) U.K. business, its new CEO. He replaces Eric Daniels, who is stepping down. Lloyds shares traded on the New York Stock Exchange were rising 3% to $4.43, while Santander's were falling 1.8% to $12.34.

 

Chesapeake Energy (CHK), Transocean (RIG) and Whole Foods (WFMI) will report results after the closing bell.

 

October car sales will be released this afternoon. General Motors said sales of its core brands rose 13% in October while overall sales ticked 3.5% higher.

 

Crude oil for December delivery was adding 79 cents at $84.69 a barrel. The Energy Information Administration said crude oil inventories increased by 2 million barrels in the week ended Oct. 29, meeting the expectations of analysts polled by Platts.

 

The December gold contract was gaining $1.20 at $1,358.10 an ounce.

 

The dollar was trading lower against a basket of currencies, with the dollar index down by 0.1%. The benchmark 10-year Treasury note was strengthening by 8/32, diluting the yield to 2.565%.

 

The FTSE in London was increasing 0.2%, and the DAX in Frankfurt was adding 0.3%. Hong Kong's Hang Seng jumped 2% higher, and Japan's Nikkei climbed 0.06%.

 

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218Comments
Nov 3, 2010 12:42PM
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deklen - I have asked it twice, once today and once yesterday but you ignore it.  Simple question.  

Do you have the day off today, or are you stealing time from your company, you know, the one that us taxpayers support?  
Nov 3, 2010 10:42AM
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The House needs to take a page from the '94 playbook - bombard the Senate with legislation  that the overwhelming majority of the people want - defund NPR, propose an actual budget, make the tax cuts permanent, balanced budget amendment, repeal cap and trade as passed by the House, propose spending cuts, fix social security, pay off some debt, etc...  Put the burden on the Senate and let them vote against these measures, let them table the bills, put them on the record as being obstructionists, or for or against these ideas.
Nov 3, 2010 9:53AM
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For what it's worth, Wall Street Journal says Dems are going to lose the Senate next go-around, 2012. They will have too, too many vulnerable Democrat Senators in Republican and swing states up for election. Should be worse than even this election, senate-wise.
Couple that with the fact that about 70% of the Senators running in 2012 will be Dems and the math doesn't look so good for them to hold the Senate. So if you don't like Reid's smiling face as majority leader, you probably only have to stomach it for two more years.
Nov 3, 2010 9:52AM
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The best part of last night will be not having to see Nancy Pelosi on TV as the Speaker of the House.

Unfortunately, Reid will still be around.  

Nov 3, 2010 9:49AM
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The tea party transcends party politics.  The tea party is about the philosophy, function and structure of government and its relationship to the people.

The ideals and values of the tea party do not attach themselves to a party, rather the party needs to attach itself to the values. 

The challenge for the tea party is to keep the ideals alive and not let party establishment values  extinguish the light

Nov 3, 2010 9:21AM
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deklen - Its quite simple.  The people have spoken, loud and clear.  And, I don't think they were all multi millionaires.  
Nov 3, 2010 11:02AM
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We cannot have ANY tax cuts without even more SPENDING cuts.  

 

Government spending SLOWS the economy. Stop applying the brakes and maybe the economy can grow...

 

 

Nov 3, 2010 1:20PM
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im not a phony - im a working, tax paying lefty by default, who ordinarily would like political balance in our system, but can now see (over the past 20 yrs) that we have an obstinant right wing cadre of undereducated kneejerks who care not for our country but angry control over a future they will never inherit

 

Deklen - from your posts it is obvious what you personally have to work with intellect-wise, and I must say that I stand in awe of your ability to spell words and make sentences. You go girl!

Nov 3, 2010 1:16PM
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im not a phony - im a working, tax paying lefty by default, 

But Deklen, when do you work?  You are here every day with your phony transparent nonsense.  You seem to me to be simply a thief stealing time from your employer.  
Nov 3, 2010 12:59PM
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well salty, maybe you should take responsibility of your own life, mind your own business,  and try not to do any more to ruin our country - i wont hold my breath

Deklen - you are such a phony, and so transparent. 
Nov 3, 2010 11:21AM
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All the Republicans have to do is ONLY pass a balanced budget in the house.   Strip out all the Donkey payback provisions, eliminate all excess spending, and cut accross the board.

 

Do that and Obama is finished...

Nov 3, 2010 11:19AM
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rtt,

 

I doubt there will ever be a solution...  Those that work want to keep what they earn.  Those that do not will always want a bigger handout. 

 

Obviously, we will always have poor people.  American poor people are better off than most of the worlds poor.  I am all for helping the poor, PROVIDED we pay for the help via EQUAL taxation.

 

It is mantra of the Donkey Party to want to treat people Unequally when it comes to taxes.  You cannot have fairness with inequality.  

 

One of the fundamental controls our founding father had in place to prevent big government was equal taxes.  This meant you had to TAX the poor as much as the rich.  This was a natural deterrent to big government.

 

Now we have the become a semi-socialist state.  We need to return to small government, and end the socialist mentality.

Nov 3, 2010 10:43AM
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Deklen, your guy Clinton signed NAFTA....the single most dominant fed policy that has resulted in outsourcing of American jobs.

 

 

Nov 3, 2010 10:22AM
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Deklen,

failure already?
vote em out!!!
That's what we did last night. America said a big heck no to Obama and liberalism. It was refreshing don't you think?
Nov 3, 2010 10:15AM
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So the Republicans are being given a 2nd chance...I sincerely hope they do better this time. If they do, They'll have my vote in 2012.  They got 2 years...just like the Dem's were given.

Um, Dems had 2 years of holding all 3 branches with huge majorities in the Senate and the House.  The Repubs on the other hand, will only control 1 branch for the next 2 years.
Nov 3, 2010 9:57AM
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THANK YOU Money Wise!  Thank You.   
Nov 3, 2010 9:48AM
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As I mentioned yesterday, our firm changed it's strategy with our clients about 2-3 weeks ago based on the concept that a GOP victory was already built into the markets.  It was buy and hold advice.  We had to change strategy as I mistakenly thought markets would act closer to elections.  But, as it became apparent that a tidal wave was happening, we had to change.

 

Unless something drastic happens the markets should waver around even for now and then end up the year at 1200-1250 S&P (no change). 

 

I believe that the BUSH tax breaks will not be acted upon until next year.  But they will not expire with middle class getting a permanent (whatever that means in politics) break and a 1-2 year extension for those with a taxable income of 250K+.  However, it may be that payroll deductions increase pending this legislation although that can be avoided if Obama wants to do so.

 

Bottom line:  Obama is a done deal.  His Socialist policies will not be enacted.  I think there will be some tinkering with Health Care (tort reform) but it will be until 2013 when a Republican President and Senate will start anew and develop a plan that makes sense.  Remember, the most costly parts of the plan don't take effect until 2014.  Additionally, by then the Communist concept of mandated health insurance will heve been declared unconstitutional by the Conservative leaning Supreme Court.  Even if one justice (Ginsberg retires or passes), the Senate can now filibuster any Obama socialist nominee.

 

What a relief yesterday was.  Tank you Americans for seeing the light.

 

Yesterday was a major victory for true Americans who think that they should work for a living and pay their way through life.  Let's hope that the GOP does not repeat it's mistakes and sticks true to form with fiscal responsibility and a pro business outlook. 

Nov 3, 2010 11:05AM
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never was and never will be a ceo,

 

The dems are for social class movement? Your "Great Society" implemented by dems under Johnson to eliminate poverty has resulted in more of it. It has created generational welfare. It is the symbol of liberal failure. But it has created a whole class of voters dependent and beholden to their liberal elitists for food and shelter. Looks more like the dem idea of class movement is to bring everyone down to their level.

Nov 3, 2010 9:45AM
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usa-  It should have been bigger?  60 seats was reported to be the largest change since 1948 is what I read.  

decklen -  No, Republicans do not want to change who we are, we are very happy who we are, because we know that we are correct for the best direction of our country. 

The thing that absolutely amazes me is how you dems don't understand how you simply buy votes.  And a large part from the seemingly unproductive.  

Tell me something, ok?  How does penalizing the productive, and awarding the non productive, help our country?  
Nov 3, 2010 9:45AM
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The Tea Party is just getting started.  Round 2 is 2012, when the big tumor in the whitehouse is carved out.  The little dem tumors like Harry in the senate will also be surrounded and go stand in the corner for time out until their ouster, resignation or expiration.   At all times Republicans need to be monitored and held accountable.

 

The conservative movement will continue until the progressive cancer is weeded out of government at all levels.  Then the work of assimiliation of immigrant cultural stragglers can accelerate so we don't end up in another European social experiment disaster.

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