Dow off 125 as Europe's debt crisis slams stocks
U.S. markets sag after a weak auction of Spanish debt but see declines trimmed in late trading. Tech stocks fall on SanDisk's earnings warning. ISM's services index is weaker than expected. Oil, gold and interest rates fall.
Updated: 7:43 p.m. ET
Stocks suffered their worst one-day losses since at least early
March after a very weak auction of Spanish bonds battered European stocks and reminded investors around the world that Europe's debt crisis is far from over.
The sell-off was also part of a continuation of Wall Street's concern about what markets would look like if the Federal Reserve holds back on more stimulus for the economy. But there was some good news for investors: Losses were trimmed substantially in the afternoon.
The selling came despite decent reports on private-sector job growth and on the services economy. The drubbing was exacerbated by a slump in technology stocks after flash-memory maker SanDisk (SNDK) warned that fiscal-first-quarter results would be weaker than expected. SanDisk was off $5.54 to $44.51. Apple (AAPL), which has been a SanDisk customer, closed down $5.01 to $624.31 after falling to as low as $617.
The European worries sent many investors looking for safety, which meant money flowed into U.S. markets. That pushed the dollar higher. Gold (-GC), crude oil (-CL) and interest rates were lower.
The Dow Jones industrials ($INDU) closed down 125 points to 13,075; the blue chips had been down as many as 179 points. The Standard & Poor's 500 Index ($INX) dropped 14 points to 1,399, and the Nasdaq Composite Index ($COMPX) fell 45 points to 3,068.
Article continues below.The Dow and S&P suffered their biggest declines since March 6 when they fell 204 and 21 points, respectively. The Nasdaq's loss was its biggest since Dec. 8, when it fell 53 points.
However, bulls were able to keep the S&P 500 above 1,395, its 20-day moving average and an important support level.
The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, was down 38 points to 2,745. Apple contributed about 4 points to the index's loss. Microsoft (MSFT), down 73 cents to $31.21, contributed more than 5 points to the loss. (Microsoft is the publisher of MSN Money.)
To be sure, the U.S. market had been poised for a fall, particularly the Nasdaq and Nasdaq-100 indexes. Both were pushed higher by Apple's 55% gain for the year through Tuesday when it closed at a record $629.32 after hitting an all-time high of $632.21.
The year has been remarkably stable. The Dow has lost 100 points or more just twice in 2012. By this time a year ago, it had sustained seven losses of 100 points or more.
Ahead on Thursday
Major retail chains will report March sales on Thursday. In addition, outplacement firm Challenger Gray Christmas will report on mass layoffs in March. The Labor Department's weekly report on jobless claims comes out.
Futures trading suggests a flat open on Thursday, which will be the last day of trading this week. The stock market is closed Friday for Good Friday. Bond trading stops at noon.
Investors love Bed Bath & Beyond results; jeer results from Ruby Tuesday
After the close, shares of Bed Bath & Beyond (BBBY) were up 5% to $69.50 after fiscal-fourth-quarter results easily beat estimates. Revenue of $2.79 billion was up 9.1% from a year ago. Earnings per share of $1.48 were up 32% from a year ago. Same-store sales were up 5.9% from a year ago. In fiscal 2011, same-store sales grew 7.8%.
The company is projecting earnings of 79 cents to 83 cents a share; analysts are looking for 82 cents a share.
Meanwhile, shares of Ruby Tuesday's (RT) were off nearly 12% after hours to $7.89. Results were hurt by a 5% decline in same-store sales and a 6.4% decline in operating expenses. The company forecast earnings after one-charges of 43 cents to 48 cents; analysts have been expecting 56 cents.
Crude oil drops below $102
Crude oil settled down $2.54 to $101.47 a barrel in New York after the Energy Department reported an increase of some 9 million barrels in domestic inventories, much larger than expected. Brent crude settled down $2.52 to $122.34 a barrel.
The retail price of gasoline averaged $3.928, up slightly from Tuesday, AAA's Daily Fuel Gauge Report said.
The price decline hit energy shares. Exxon Mobil (XOM) dropped 85 cents to $84.98. Chevron (CVX) fell $1.54 to $105.60. The Energy Select Sector SPDR (XLE) exchange-traded fund fell 92 cents to $70.90.
Gold settled down $57.90 to $1,614.10 an ounce, its biggest one-day decline since Feb. 29, when it fell $77.10, and its lowest price since Jan. 4. Silver (-SI) dropped $2.221 to $31.04 an ounce, a 6.7% decline and its largest decline in five weeks. Copper (-HG) settled down 12.85 cents to $3.7905 a pound.
The metals decline was mostly seen as a reaction to the suggestion in Federal Reserve minutes that the Fed isn't likely to add stimulus to economy without a seriously faltering economy.
Freeport-McMoRan Copper & Gold (FCX) was off 55 cents to $38.03. Newmont Mining (NEM) dropped $1.81 to $48.53. U.S. Steel (X) fell 98 cents to $28.70. Alcoa (AA), which reports first-quarter earnings on Tuesday, fell 25 cents to $9.81.
Interest rates were lower, with the 10-year Treasury yield falling to 2.239% from 2.284% on Tuesday.
|Energy prices -- New York close|
|Wed.||Tues.||Month chg.||YTD chg.|
|Crude oil (-CL)||$101.47||$104.01||-1.50%||2.67%|
|Heating oil (-HO)||$3.1609||$3.2275||-0.29%||8.47%|
|Natural gas (-NG)||$2.1410||$2.1870||0.71%||-28.37%|
|(per mil. BTU)|
|Unleaded gasoline (-RB)||$3.3336||$3.3954||0.77%||25.45%|
|(per gallon; AAA)|
Why Spain hurt Europe
The auction of Spanish government debt was a big disappointment. The government sold just 2.589 billion euros ($3.43 billion) worth of bonds, at the bottom of its planned range of 3.5 billion euros, and at yields that were well above previous auctions. Most of the debt was bought by Spanish banks.
Following the auction, yields on 10-year Spanish government debt rose to 5.669%, from 5.445% Tuesday, the highest level since Jan. 9.
The auction is a first verdict on the new government's just-announced budget plan, which calls for severe spending cuts and tax increases to trim a persistent deficit, The Wall Street Journal said.
Many economists have warned that deep austerity -- European policy makers' favored weapon against the debt crisis -- could plunge weak economies into deep contraction. Spain is struggling with 23% unemployment. The government forecasts its economy will shrink 1.7% this year.
Non-manufacturing industries grew in March
Service industries in the U.S. grew in March, capping the strongest quarter in a year and indicating the world’s largest economy will keep generating jobs.
The Institute for Supply Management’s non-manufacturing index fell to 56 from a one-year high of 57.3 in February. Last month’s reading still topped the average for the previous economic expansion. The dip was not expected; most economists had predicted a small gain.
Since mid-2011, the industries that account for almost 90% of the economy have outpaced gains in manufacturing, which had been at the forefront of the two-year expansion.
"No longer can we say that only manufacturing is powering the economy forward," Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, told Bloomberg News. "The general trend is very encouraging."
ADP says businesses added 209,000 jobs in March
Businesses added more than 200,000 jobs in March, giving fresh evidence of continued improvement in the labor market, according to the ADP National Employment Report.
The report was in line with expectations.
Analysts said it did not change their forecasts for the government's more comprehensive labor market report for March due on Friday, which includes both public- and private-sector employment. The Labor Department is expected to show nonfarm payrolls gaining 200,000 jobs with the unemployment rate holding at 8.3%.
Best Buy shares face a downgrade
Best Buy (BBY) shares were down 60 cents to $22.95 after Standard & Poor's placed the company's BBB- rating on a credit watch with negative implications. That means a downgrade to junk status is possible.
The issue: Best Buy's business model isn't working, S&P said today, and the retailer has shown little progress to improve its performance. The ratings agency will meet with company management before issuing a final determination on a downgrade.
P&G leads the Dow; Yahoo slides on layoff news
American International Group (AIG), Avon Products (AVP), the target of a takeover bid, and apparel retailer Gap (GPS) were the S&P 500 leaders. SanDisk was the laggard as well as the biggest loser among Nasdaq-100 stocks.
Yahoo (YHOO), which announced it's laying off 2,000 workers, was up 9 cents to $15.27.
Financial stocks were the market's weakest sector.
JPMorgan Chase (JPM) was down $1.01 to $44.41. The Commodity Futures Trading Commission said the company will pay $20 million to settle charges that it unlawfully handled customer segregated funds at Lehman Brothers.
|Short hits from the markets -- New York close|
|Wed.||Tues.||Month chg.||YTD chg.|
|13-week Treasury bill||0.0700%||0.070%||0.00%||600.00%|
|5-year Treasury note||1.050%||1.105%||0.67%||26.51%|
|10-year Treasury note||2.243%||2.284%||1.22%||19.88%|
|30-year Treasury bond||3.380%||3.410%||1.05%||17.00%|
|U.S. Dollar Index||79.949||79.641||1.02%||-0.71%|
|(in U.S. $)|
|U.S. $ in pounds||£0.629||£0.628||0.72%||-2.25%|
|Euro in dollars||$1.31||$1.32||-1.47%||1.47%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.761||€ 0.755||1.49%||-1.45%|
|U.S. $ in yen||82.58||82.81||-0.50%||7.10%|
|U.S. $ in Chinese||6.32||6.30||-0.04%||-0.13%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$101.47||$104.01||-1.50%||2.67%|
Crude oil fell $2.49 to $101.52 a barrel in New York after the Energy Department reported an increase of some 9 million barrels in domestic inventories, much larger than expected.
Well with gas prices hovering close to $4.00 a gallon people are driving less because they are going broke filling up the gas tank. These prices are killing the average family & since gas costs more people are spending & driving less which also hurts other sectors of the Economy. Here is a wake up call to Washington: "Get a grip on the Wall Street Speculators who are falsely manipulating the Barrel price to their gain & screwing everyone else".
Crude oil fell $2.49 to $101.52 a barrel in New York after the Energy Department reported an increase of some 9 million barrels in domestic inventories, much larger than expected. Brent crude was off $1.84 to $123.02. I still don't understand how gas continues to rise. I thought gas prices followed crude and brent prices? I thought gas prices followed supply and demand? That just shows you how we get lied to so others can take our money. Well as you can see we are out of money!!!!
Don't worry about the markets, old Bendover has already inked up the presses for June. He's backed himself into a corner with all the stimulus keeping the market up but now he has no choice. If the markets drop during an election year along with the rising unemployment rate and high gas prices his tenure as Fed chairman is over. He was appointed by Bush and Obama then confirmed by the Senate. If Obama loses the election the new POTUS will nominate a new Fed chairman. What's worse under a new POTUS we will have new DOJ, SEC and other major heads that will begin looking at criminal activity by Bendover and others.
The markets HAVE to stay up in order to keep the Banks and Wall Street funneling donations to the Obama campaign like they did in 2008. Some of the largest contributors to the Dem PACS were from those entities. The financials knew they could have free reign with Obummer in office. High gas prices will be blamed on the oil companies and the high unemployment will be twisted and manipulated to show far less than reality. Keep the market up and the sheeple will be convinced that all is right with the world.
What we are witnessing in this point in history is the largest Ponzi scheme ever created. This administration fooled the American voter with the help of a complicant liberal news media and screams of racism any time Obama's qualifications were questioned. This country is at the financial cliff and the folks who claimed to have "pulled the car out of the ditch" are driving staight into the abyss with stupid grins on their faces.
This is one of those cut and paste articles. We have seen this article before, except now it is Spain's turn to take the blame.
Just once I would like to see a headline like "Excessive Corporate Greed Slams Markets" or "The 1% Is Tanking Your Future", or "Greedy Oil Speculation Has Gas Prices Skyrocketing".
A little truth every so often wouldn't hurt anyone, would it ?
If ga**** the $5 a gallon mark some are predicting? Just watch. Thelma and Louise won't be a speed bump compared to the freefall from that.
Even at $4 a gallon most aren't making it.
edited to say missed space bar between gas and hits. MSN didn't like it very much.
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[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 added just over a point, holding its weekly gain at 1.0% while the Nasdaq lost 0.4%.
The major averages began the day on an upbeat note, but relinquished their opening gains during the first 90 minutes of action. The early sentiment was boosted by a better-than-expected nonfarm payrolls report for February (175K versus Briefing.com consensus 163K), but a closer look into the report suggested that ... More
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