Dow off 76 as Greek debt crisis erupts again
While the blue chips come back from a 198-point loss, traders fear more declines ahead. Disney results cheer Street. Fossil tumbles after warning European sales are softening. McDonald's April sales disappoint. Oil briefly drops below $96.
Updated: 8:41 p.m. ET
Stocks slumped badly at the open today as traders worried about Greece and the European Union, but the losses prompted buying in the afternoon that cut the losses by as much as two-thirds.
The rebound, however, may be only a short-term event as many analysts see the Standard & Poor's 500 Index ($INX) falling to 1,300 in the next few months.
The problem with Greece was the inability of its politicians to form a government. There's talk that the government will run out of cash in June or July without help. But help isn't yet visible. There's talk the country will abandon the euro. Add a dash of worry that U.S. stocks are starting what looks to be their usual spring-and-summer swoon, and you had the recipe for a miserable day for stocks.
And you got it for much of the day. The Dow Jones industrials ($INDU), in the throes of their fifth straight loss, were down as many as 198 points, but the loss shrank to less than 80 points. Walt Disney (DIS) shares were up 1.6% to $45 after hours as fiscal-second-quarter earnings of 58 cents a share beat the consensus estimate of 55 cents. Revenue was up 6.1% to $9.63 billion.
The Dow closed down 76 points to 12,932 -- its first close below 13,000 since April 23. The S&P 500 was off 6 points to 1,364, its lowest close since April 10. The Nasdaq Composite Index ($COMPX) tumbled 11 points to 2,946, its worst finish since March 7. The Nasdaq-100 Index ($NDX) was off 9 points to 2,630.
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But the company expects the business to show a big profit in the fiscal third quarter because of what appears to be the blockbuster success of the movie "The Avengers." The film grossed $207 million in its opening U.S. weekend and has grossed $702 million globally already.
Disney's results were helped by its television businesses, particularly its ESPN cable business, and its theme parks and resorts. Domestic theme parks did well, as did the Tokyo Disney Resort and Hong Kong Disney Resorts. But revenue slipped at Disneyland Paris, while costs rose.
The Tokyo theme park's 2011 results were terrible after the March earthquake and tsunami, which forced the company to shut the resort down.
In all, Disney earned 58 cents a share in the quarter after an acquisition and restructuring and impairment charges, up 18% from a year ago. Revenue rose to $9.63 billion from $9.08 billion a year ago. The company doesn't offer earnings and revenue guidance, but CEO Bob Iger said the company was "incredibly optimistic" about its prospects.
A difficult day ends not so badly
The day saw some ugly selling. Fossil (FOSL), an upscale merchant of fashion accessories, closed down $47.25 to $78.52 after warning that sales in Europe are weakening.
McDonald's (MCD) fell $1.96 to $93.55 after April same-store sales growth came in at 3.3%. That was lower than a company projection of 4%. Analysts had been looking for 4.3%. U.S. sales were up 3.3%, well below the analyst estimate of 5%.
McDonald's closing price was below its 200-day moving average, a major barometer of investor confidence. Also ending below its 200-day moving average was Caterpillar (CAT), down 70 cents to $96.49.
Yahoo (YHOO) shares closed up a penny to $15.36. The company has been roiled by questions about CEO Scott Thompson's educational background. He claimed a degree in computer science when his college didn't offer such a degree. Dissident shareholder Daniel Loeb sued the company in a Delaware court, demanding release of documents related to Thompson's hiring.
Director Patti Hart, who headed the search committee, said today's she will step down at the company's annual meeting.
Apple (AAPL), which dominates the Nasdaq-100, briefly was in the black today but closed down $1.30 to $568.18. Its intraday low of $558.73 was its lowest level since April 24.
Futures trading suggests a flat open for stocks on Wednesday. Earnings are due from Macy's (M), News Corp. (NWSA), Cisco Systems (CSCO) and Sodastream International (SODA).
Crude oil and gold move lower
Crude oil (-CL) briefly fell below $96 a barrel in New York, and gold (-GC) was for a moment trading below $1,600 an ounce -- both for the first time since December.
Crude oil in New York settled down 93 cents to $97.01 a barrel after falling to as low as $95.52. Gold dropped $34.50 to settle at $1,604.50 an ounce; it had reached as low as $1,595.50. Gold was up as much as 14% for the year in February; the gain has been cut to 2.4%.
Silver (-SI) was off 66.3 cents to $29.459 an ounce. Copper (-HG) fell 9.6 cents to $3.6775 a pound.
The dollar was higher as investors looked for safety away from Europe. The euro briefly dropped below $1.30 Interest rates were lower, with the 10-year Treasury yield falling to 1.837% from 1.877% on Monday.
"It's the unknown in Europe affecting the market," Hank Smith, chief investment officer at Haverford Trust, told Bloomberg News. "If Greece does exit the euro, will there be contagion? It could have a negative reverberation throughout the globe."
|Energy prices -- New York close|
|Tues.||Mon.||Month chg.||YTD chg.|
|Crude oil (-CL)||$97.01||$97.94||-7.49%||-1.84%|
|Heating oil (-HO)||$2.9901||$2.9814||-6.10%||2.60%|
|Natural gas (-NG)||$2.3930||$2.3360||4.73%||-19.94%|
|(per mil. BTU)|
|Unleaded gasoline (-RB)||$2.9944||$2.9741||-4.17%||12.68%|
|(per gallon; AAA)|
Fossil shares get crushed
Fossil's 37% decline was easily the largest among S&P 500 stocks. The company, which markets watches, handbags and other products, reported first-quarter revenue of $589.5 million, missing the average analyst estimate of $617.9 million, citing a softening economy in Europe.
Fossil’s earnings per share of 93 cents beat analysts' expectations by a penny.
The company also lowered its 2012 earnings forecast to no more than $5.33 a share. The average analyst estimate had been $5.56 a share.
Fossil's woes affected Coach (COH), which was down $1.26 to $70.80. Tiffany (TIF) was down 96 cents to $64.75.
"While luxury companies talk up their growth in Asia," Barron's noted today, "they are clearly still heavily dependent on European sales."
A broad decline and light volume
Eight of 10 sectors in the S&P 500 fell back today as consumer discretionary and telecom shares had the biggest losses. Utilities and health care were the only sectors with gains.
Only five of the 30 Dow stocks were higher on the day, led by Disney and Johnson & Johnson (JNJ), up 18 cents to $64.98. Hewlett-Packard (HPQ), down 55 cents to $23.32, and Bank of America (BAC), down 17 cents to $7.79, were the laggards. Caterpillar, Home Depot (HD), IBM (IBM) and McDonald's contributed 36 points to the Dow's loss by themselves.
A total of 151 S&P 500 stocks finished in the black, led by Cognizant Technology (CTSH) and Tyson Foods (TSN). The laggards were Fossil and Dun & Bradstreet (DNB).
Meanwhile, Vertex Pharmaceuticals (VRTX) and Green Mountain Coffee Roasters (GMCR) were the top Nasdaq-100 performers. Fossil and Wynn Resorts (WYNN) were the laggards. Only 37 stocks in the index showed gains.
Volume, however, was light. Volume on the floor of the New York Stock Exchange barely topped 900 million shares. Nasdaq volume was 2.17 billion shares.
Green Mountain has a rough after hours
Green Mountain shares, however, fell more than 3% to $25.58 after hours after the company said that Chairman and founder Robert Stiller and lead director William Davis resigned their positions but remain board members.
The reason: Margins call had forced the pair to sell 5.548 million shares of company stock. The sales came even though internal policies said they couldn't pledge shares as collateral in margin accounts after Jan. 1.
Stiller had pledged as many as 12.5 million shares in a margin account. The stock's recent plunge had triggered margin calls and forced the sale of about 5 million shares. Davis had actually added to shares pledged, in violation of the board's policy.
Stiller will be replaced by Michard Mardy, who has been chairman of the company's Audit and Finance Committee. Hinda Miller will take over as chairman of the Governance and Nominating Committee. She has headed the Corporate Social Responsibility Committee.
Leaders and laggards
Dendreon (DNDN) plunged $2.94 to $8.75. The maker of the prostate-cancer drug Provenge reported a first-quarter loss excluding some items of 67 cents a share, wider than the average analyst estimate of a loss of 64 cents.
Video-game maker Electronic Arts (EA) dropped 65 cents to $14.48. It bottomed at $13.83, its lowest intraday price since May 2000. The second-largest U.S. video-game publisher forecast a loss in the first quarter of at least 40 cents a share, wider than the 33-cent loss projected by analysts on average.
Wynn Resorts lost $5.96 to $119.23. The casino company founded by billionaire Steve Wynn reported first-quarter earnings fell 19%, missing analysts' projections on lower winnings in Las Vegas. Separately, Wynn suspended plans to build a casino in Foxboro, Mass., after Monday’s regional elections in which residents voted in anti-casino candidates.
Dun & Bradstreet fell $10.66 to $65.04. The owner of the Hoover's business information service reduced its full-year sales forecast.
|Short hits from the markets -- New York close|
|Tues.||Mon.||Month chg.||YTD chg.|
|13-week Treasury bill||0.0900%||0.070%||0.00%||800.00%|
|5-year Treasury note||0.763%||0.782%||-5.92%||-8.07%|
|10-year Treasury note||1.837%||1.877%||-4.07%||-1.82%|
|30-year Treasury bond||3.023%||3.067%||-2.77%||4.64%|
|U.S. Dollar Index||79.849||79.293||1.27%||-0.84%|
|(in U.S. $)|
|U.S. $ in pounds||£0.618||£0.617||0.44%||-3.92%|
|Euro in dollars||$1.30||$1.31||-1.56%||0.64%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.767||€ 0.766||1.59%||-0.63%|
|U.S. $ in yen||80.00||79.90||0.00%||3.76%|
|U.S. $ in Chinese||6.33||6.31||0.46%||0.06%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$97.01||$97.94||-7.49%||-1.84%|
Blaiming "greedy corporations" is the new opiate of the masses in 2012. Not the fact that the entitlement programs are going bust as more and more people enter into programs that weren't designed for today's demographics. nevermind that the gov now borrows 40 cents on every dollar and it is slated to rise to 60 cents on the dollar within 15 years. No economist thinks this is sustainable.
Someone else MUST be responsible for our plight surely it's not the man in the mirror.
Please. Who gives the 'evil' corporations power? You, the consumer. It is not Congress that forces you to buy these corporations products & services. If you don't want to pay $70 for admission, DON'T PAY. If enough people feel the same way you do guess what will happen (this is a secret so make sure you keep this quiet)...they'll lower the price!! Shocking right?
The Commander-In-Chief has a lot of backbone, just ask Osama how much he has.
Greece driving the market...had to happen
...hasn't happened in weeks!
Mister Kyle and others.....Let's get this straight ...The death of Binladen is not an accomplishment of one person.
Mister Kyle and others.....Let's get this straight ...The death of Binladen is not an accomplishment of one person. While one or more acted in pulling a trigger it took many to do the job across two presidencies. This was not a Republican nor a Democrat issue. This was a United States vrs." Radical Isalm" issue. To polarize it to any political agenda is wrong period. Any organization or person who uses it as a political tool disrespects those who died on 911, thier families and those who worked hard to remove this fanatic.
Of course those who are self absorbed will find issue with this simple fact as well...bitch on brothers and sisters bitch on....
Yes MisterKyte, I couldn't agree more.
And Dahly, you're spot on, too.
Socialism (or Communism) can only work in a very localized group. It was the basis of many an ancient socio-economic system. But there are now 7-billion souls on planet Earth, and things aren't so simple anymore.
I believe in the capitalist market. But the capitalist must have a heart, or all is lost = folks knee-jerk back to Socialism--an already tried and failed, again and again, system. Only under the gun.
"Fast and Furious" would be front page above the fold for months if any but Obama tried to do that.
It looks like my prediction this morning that the DOW would finish the day down between 50-75 points is right on target even though at the time it was down over 170 points. I just knew that those in control of this market would not let it have another huge downer of a day. This is just another example of how screwed up this manipulated market is. It is time to shut down Wall Street and do a total revamp on how Wall Street operates because the way it is now...is nothing short of criminal.
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[BRIEFING.COM] S&P futures vs fair value: -0.90. Nasdaq futures vs fair value: -1.50. The stock market is on track to begin today's session on a flat note, with the S&P 500 looking to continue its climb after gaining 3.5% over the past six sessions. Although the market is gearing up for a subdued start, quarterly earnings that have been received since yesterday's closing bell were mostly better than expected. Dow components Boeing (BA 130.99, +3.44) and Procter & ... More
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