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.

By Charley Blaine May 8, 2012 1:26PM

Charley BlaineUpdated: 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.

Article continues below.

Disney was up 48 cents to $44.30 in regular trading. The entertainment company's results included a write-off of around $200 million for the film "John Carter." The commercial disaster meant that studio entertainment, Disney's movie business, generated an operating loss of $84 million, down from a profit of $77 million a year ago.

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%
(per barrel)











Heating oil (-HO)

$2.9901

$2.9814

-6.10%

2.60%
(per gallon)











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)











Brent crude 

$112.73

$113.16

-5.51%

5.19%
(per barrel)











Retail gasoline

$3.7630

$3.7770

-1.39%

14.87%
(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.
Treasury yields











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%
Currencies











U.S. Dollar Index

79.849  79.293  1.27%  -0.84%
British pound

1.6171  1.6202  -0.44%  4.08%
(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%
yuan

            
Canada dollar

$1.002  $1.008  -1.12%  2.13%
(in U.S. $)

          
U.S. dollar 

$0.999  $0.992  1.14%  -2.09%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,604.50

$1,639.10

-3.59%

2.41%
(per troy ounce)











Copper (-HG)

$3.678

$3.774

-3.97%

7.03%
(per pound)











Silver (-SI)

$29.4590

$30.1220

-5.02%

5.53%
(per troy ounce)











Wheat (-ZW)

$6.1500

$6.1200

-6.04%

-5.78%
(per bushel)











Corn (-ZC)

$6.2300

$6.200

-1.77%

-3.63%
(per bushel)











Cotton 

$0.8618

0.8667

-3.60%

-6.00%
(per pound)











Coffee

$1.7495

1.752

-2.56%

-23.82%
(per pound)











Crude oil (-CL)

$97.01

$97.94

-7.49%

-1.84%
(per barrel)










 

164Comments
May 8, 2012 1:49PM
avatar
There's an old saying in business. "Never send good money after bad". To bail out Greece anymore would be a waste. They'll only keep coming back for more from Daddy.
May 8, 2012 2:47PM
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http://www.coburn.senate.gov/public/index.cfm?a=Files.Serve&File_id=b69a6ebd-7ebe-41b7-bb03-c25a5e194365 
And you wonder why people resist sending their money to the government. And this is just the tip of the iceberg.  If we don't get our act together soon, we'll make the crisis in Europe look like a walk in the park.  Republicans need to accept cuts to defense and corporate welfare, along with higher taxes on the super wealthy.  Democrats need to accept deep cuts to social programs, especially entitlements. It will only work if everyone shares the pain.

May 8, 2012 2:09PM
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"Too big to fail?"  Never again!  Greece, and all nations, monetarily survive, or not, based on it's own efforts.  Socialism has never worked as eventually you run out of other peoples money.
May 8, 2012 2:20PM
avatar

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.

May 8, 2012 2:58PM
avatar
Be careful what you wish for. Let the Greeks fall, they've been given more than sufficient warning and they chose to go down this path anyway. Let them be a lesson to everyone else out there who refuses to accept reality. The hit the world economy will take from a failed Greece will be much easier to bear than allowing France, Italy, Ireland, England, etc follow down the same road.
May 8, 2012 1:59PM
avatar
Today's sports fill the same role that the Roman gladiators did. Entertainment and distraction for the mindless sheeple, while the people in power rob you blind.
May 8, 2012 2:15PM
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@OutFlip

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?

May 8, 2012 2:31PM
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The Commander-In-Chief has a lot of backbone, just ask Osama how much he has. 
You clearly have Obama confused with the Warriors who actually went in and did the job.
May 8, 2012 2:22PM
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Obama has no spine, but says he's working on borrowing one from China.
May 8, 2012 2:36PM
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This European situation is starting to really piss me off. These Euro countries, excluding Great Britain and Germany are out of control. Electing spending and non-austerity leaders, unable to get their policies in order, relying on well managed countries to bail them out. Hell, there just as bad as the union cartel and dependant needy in the US.
May 8, 2012 1:46PM
avatar

I'm shocked!

 

Greece driving the market...had to happen

...hasn't happened in weeks!

May 8, 2012 3:00PM
avatar
Mister Kyle and others.....Let's get this straight ...The death of Binladen is not an accomplishment of one person. 
You just reinforced my point that acting like Obama is the best thing since sliced bread, just because he made the right call once, is a joke. He didn't make it happen, he just allowed it.
May 8, 2012 4:37PM
avatar
Europe's economic mess is NOT President Obama's fault, nor is this the fault of George Bush!  However, since President Obama wants our economy to mimic the debt-laden socialist economies of Europe, this IS our future also unless we resolve to stop socialism in America, eliminate our deficits, and begin to payoff our MASSIVE national debt.
May 8, 2012 2:06PM
avatar
Watch the movie Gladiator and you will understand that the mob just wants entertainment. It is used to distract us from the real problems that the government has created.
May 8, 2012 3:14PM
avatar
France voted itself another Robin Hood politician, too bad there is a finite amount of money to squander from the 'rich'.  The money runs out people!  When the 'rich' have all their wealth confiscated, the next down on the ladder are the target, the middle class.  This continues until there is no wealth to speak of and an entire population of poor miserable souls who keep looking for the next handout and refuse to help themselves.  Socialism only hastens the demise of societies because everyone always wants something for nothing.
May 8, 2012 2:48PM
avatar

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....

May 8, 2012 2:29PM
avatar

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.

May 8, 2012 2:10PM
avatar
@ tlbinsd,
Feels more like; "Back in the USSR"
May 8, 2012 3:21PM
avatar

borgman,

 

"Fast and Furious" would be front page above the fold for months if any but Obama tried to do that.

May 8, 2012 4:03PM
avatar

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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