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.

By Charley Blaine Apr 4, 2012 1:19PM

Charley BlaineUpdated: 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. 

Earnings are due from used-car dealer Carmax (KMX), Constellation Brands (STZ), Pier 1 Imports (PIR) and WD-40 (WDFC).

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



Month chg.

YTD chg.
Crude oil (-CL)




(per barrel)

Heating oil (-HO)




(per gallon)

Natural gas (-NG)




(per mil. BTU)

Unleaded gasoline (-RB)




(per gallon)

Brent crude 




(per barrel)

Retail gasoline




(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

Only four of the 30 Dow stocks were higher -- Merck (MRK), AT&T (T), Procter & Gamble (PG) and Caterpillar (CAT).

In addition, about 50 S&P 500 stocks and just six Nasdaq-100 stocks, led by (PCLN),Yahoo (YHOO) and Expeditors International (EPXD).

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.

Citigroup (C) was down $1.33 to $35.04. Bank of America (BAC) dropped 29 cents to $9.20 and was the weakest Dow component.

Short hits from the markets -- New York close



Month chg.

YTD chg.
Treasury yields

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%
British pound

1.5896  1.5918  -0.71%  2.30%
(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%

Canada dollar

$0.000  $1.010  -100.00%  -100.00%
(in U.S. $)

U.S. dollar 

$0.996  $0.990  -0.21%  -2.33%
(in Canadian $)





Gold (-GC)




(per troy ounce)

Copper (-HG)




(per pound)

Silver (-SI)




(per troy ounce)

Wheat (-ZW)




(per bushel)

Corn (-ZC)




(per bushel)





(per pound)





(per pound)

Crude oil (-CL)




(per barrel)

Apr 6, 2012 8:09AM
What's going to happen to the economy when the government sells off all the stock they've been buying to artifically bolster the economy.  When they sell it off the market will drop at least 1500 points!!
Apr 5, 2012 10:45AM
As you may know, yesterday these manipulators had another terrific day, no wonder their giggly mood this morning. Today we had some decent news again and again we are going down. Like you have heard a million times, news are basically irrelevant, people move markets. Scumbags are trying to do and undo at will like yesterday....Who will they blame it on today? Europe, the Fed, oil? Oh well, still early, we will see what happens. Remember, short week. We are closed on Friday.
Apr 5, 2012 6:17AM

"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."


Adding service jobs is better than not adding any jobs but service jobs are typically low wage with no benefits which really don't do all that much to stimulate the economy.  We need to add higher paying jobs in manufacturing, construction etc. which will allow workers to have some disposable income which they will evenutally spend to get things going again. 

Apr 5, 2012 1:01AM
....and tomorrow, it will jump up 150 points. 
Apr 5, 2012 12:29AM
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.

Big disappointment to who? Who cares about the pain in Spain? SCDC, same crap, different country. Ya think the traders wanted a reason to panic the lemmings, right over the cliff.

Apr 4, 2012 10:04PM

It's plain as day, European Markets have a direct impact on the U.S. Economy as demonstrated today with the DOW losing ground. Unfortunately, experts do claim that a collapse to the economic markets will happen in the proximate future, without question. Why, because of the overwhelming debts (social security, medicare, medicaid, U.S. and European non paid debt, 10 years of Wars, job losses, state debts, FEMA, government spending, and Trillions owed to China, other pawns).


When you look at it from the basis of "How long can we put off our debts until we balance the U.S. budget, it's unquestionable. The U.S. along with Europe is in a vicious cycle, for which we cannot substain, and as I've stated before. Get a safe, put away extra cash, to puchase food, water, and

fuel, to power lights, or your vehicle. The collapse is imminent and without careful preparation for a catastrophe unlike anything short of earthquakes, floods, hurricanes, tornadoes, etc. Don't expect the state, government, or the county to be there for you either, history shall repeat itself again.    

Apr 4, 2012 9:58PM
And gas goes up at the pumps today here by another $.08 a gallon. And their worried about Europe all over again?????hahahahaha
Apr 4, 2012 9:09PM
Taz; Big oil has a theory, sell 1 billion gallons at $4 a gallon is the same as selling 4 billion gallons at $1. Either way they get theirs and to hell with us
How about sell 4 Billion at the profit of 6 billion and the HELL with us.
Apr 4, 2012 8:59PM
sell 1 billion gallons at $4 a gallon is the same as selling 4 billion gallons at $1.

No, 4 billion gallons takes a lot more labor, maintenance, energy, logistics.

Apr 4, 2012 8:53PM
Maybe we should tax them for the privilege of helping us...
Apr 4, 2012 8:09PM
Outflip...Someone is bailing us out...Their called China..haha
Apr 4, 2012 8:07PM
Classic Lady...I don't necessarily agree with term limits, I think that by setting them you take away from what can be accomplished. i was in the Army for 12 Years. A Company Commander (Capt) Is only in command for 18 months. The company is running smooth and a New commander comes on board and chooses to change things to HIS/HER liking. So we would get use to that then their gone a new one comes on board and it starts again, with change to what THEY want to do. Same as a president or the House or Senate. if there doing a good job and the PEOPLE continue to re-elect then thats fine. However, they need to work together, MUST be at all Votes and not abstain because their in the Hampton's. if they miss a vote because of other than being hospitalized and CANNOT call in then DOCK their Pay. garuntee some things would change then.
Apr 4, 2012 8:06PM
Taz; Big oil has a theory, sell 1 billion gallons at $4 a gallon is the same as selling 4 billion gallons at $1. Either way they get theirs and to hell with us.
Apr 4, 2012 8:03PM

Problems with European market slams us????  why do we care, are not they the ones  who wanted Iraq invaded then did not want to help when asked???  Maybe the French will sell them weapons that were only used once or maybe a reactor that they can not operate!!! etc:

 Let them settle their own problems for once!! HELL we can't afford to bail anyone out ,we can't even fix our problems . LET SOMEONE BAIL US OUT OF THE HOLE THAT CONGRESS HAS DUG FOR US!!!!!!!!!!!!!

Apr 4, 2012 7:54PM

@gameover2012 Yep that's why I have been saying that the Dow is still way overvalued and the day of reckoning is still coming.

Apr 4, 2012 7:50PM
Even though i'm not an Obama Lover, nor was I a Bush Lover WE continue to blame 1 man for ALL the US problems. He alone cannot do ANYTHING. If we want to put the blame somewhere put it on Congress, The federal Reserve. Those 2 there are whats wrong with this Country. If Rep and Dem's could stop acting like children and actually do what their elected to do, we would once again be a Superior nation. But, noooo they have to fight and blame the other for the problems, one comes up with an idea the other shoots it down, comes up with their own and its the same damn thing minus a word or phrase.
Apr 4, 2012 7:49PM
Compare the price of the dow to gold in 2008 vs dow to gold in 2012.
Dow 2007 was $14,066/unit Dow Jones
Gold in 2007 was $730/ounce
It took 19 ounces of gold to buy one unit of Dow jones

Dow 2012 is $13,075/unit
Gold 2012 is $1,735/ounce
It takes 8 ounces to buy one unit of Dow jones.

the real DOW number compared to a real currency (gold) is 7540

It takes less gold to buy the same stocks, meaning the value of the stocks is actually much much lower than what they are telling you.
Apr 4, 2012 7:42PM
No Northern. It isn't obama's fault but he definitely hasn't made it better.
Apr 4, 2012 7:40PM
Crazy, there is no fixing stupid. Just look at what happened during the last presidential election.
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