Fed keeps rates alone; stocks drift lower

The Dow falls 25 after the central bank says the economy still needs help. Investors cheer Facebook's mobile ad efforts. Boeing and Panera Bread offer bullish outlooks. But Netflix shares are crushed. New-home sales are the strongest in 2 years.

By Charley Blaine Oct 24, 2012 1:06PM
Charley BlaineUpdated: 6:30 p.m. ET

Stocks fell modestly today even after the Federal Reserve said it still expects to maintain low interest rates at least into 2015. The central bank also said it will continue to buy in billions of dollars of securities each month to boost the economy.

Wall Street expected the move. The stock market's decline was due to continuing concerns about global and domestic growth and earnings worries. The effect of today's move will be to keep U.S. interest rates low for the foreseeable future. Perhaps chief among the rates for now: mortgage rates. Bankrate.com said the rate on a 30-year mortgage averaged 3.46% today.

After the close, shares of game-maker Zynga (ZNGA) jumped sharply. The company reported break-even earnings but also announced a $200 million stock buyback. Software company Symantec (SYMC) also rallied strongly as earnings beat estimates.

The market's late-day decline came after stocks were slammed Tuesday, with the Dow Jones Industrial Average ($INDU) suffering its worst one-day loss since June. Facebook's  (FB) results late Tuesday cheered investors. So did earnings and guidance from Panera Bread (PNRA) and Boeing (BA). But Netflix (NFLX) slumped from weak guidance. Energy stocks struggled as oil and natural gas prices have moved lower.
 
The Dow closed down 25 points to 13,077. The Standard & Poor's 500 Index ($INX) dropped 4 points to 1,409. The Nasdaq Composite Index ($COMPX) had fallen 9 points to 2,982 while the Nasdaq-100 Index ($NDX) was down 10 points to 2,656.

Article continues below.
Apple (AAPL), the biggest influence on the Nasdaq-100, was up $3.47 to $616.83. The company introduced its iPad Mini tablet on Tuesday and reports fiscal-fourth-quarter earnings after Thursday's close.

Amazon.com (AMZN), which also reports after Thursday's close, fell $5.82 to $228.49 after Barclay's downgraded the shares citing revenue worries.

Apple is off 7.5% this month; Amazon.com is off 10.2%.

The indexes are looking at their first declines for an October in two years and the first monthly decline after four straight gains.

In addition to the Apple and Amazon.com earnings, Revlon (REV), ConocoPhillips (COP), futures-exchange operator CME Group (CME) and candy-maker Hershey (HSY) are among companies reporting earnings.

The government reports on weekly jobless claims, and the National Association of Realtors reports on pending home sales.

Futures trading suggest a modestly higher open.

The Dow and S&P 500 are off around 3.9% since peaking in mid-September; the Nasdaq is off 6.4% as investors have worried about slowdowns around the world and at home.

The declines are noticeable but not huge. If you want huge, just look at what happened in the same time frame in 2008: The Dow fell nearly 27%.

Moreover, the relative strength indexes for the Dow, S&P 500 and Nasdaq are now under 30, suggesting all are oversold. Perhaps little will happen before the election, but the forces to set off a rally are building.

Crude oil falls to July levels
Crude oil (-CL) in New York settled at $85.73 a barrel, down 94 cents from Tuesday and the  lowest settlement since July 10. Brent crude was down 35 cents to $107.90 a barrel.

The national average retail price of gasoline was $3.625 a gallon today, according to AAA's Daily Fuel Gauge Report. That's down from Tuesday's $3.648 and down 4.3% this month.

Gold (-GC) was down $7.80 to $1,701.60 an ounce. Gold is down 4.1% this month.

The 10-year Treasury yield rose slightly to 1.775% from Tuesday's 1.764%.

Energy prices -- New York close (updated)



Wed.     Tues.

Month chg.

YTD chg.
Crude oil (-CL)

$85.73

$86.67

-7.01%

-13.26%
(per barrel)











Heating oil (-HO)

$3.0264

$3.0308

-4.20%

3.85%
(per gallon)











Natural gas (-NG)

$3.4500

$3.5350

3.92%

15.42%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.5913

$2.5911

-11.26%

2.49%
(per gallon)











Brent crude 

$107.85

$108.25

-2.08%

0.44%
(per barrel)











Retail gasoline

$3.6250

$3.6480

-4.28%

10.65%
(per gallon; AAA)












A more activist Fed
The Federal Open Market Committee, the Fed's policy-making body, vowed in September to keep rates low until what it achieved what it saw as sustained job growth.

The stock market hit those 2012 highs within a few days of that meeting.

The Fed's statement said the economy has continued to expand at "a moderate pace." It noted that housing spending has picked up "a bit," but business investment has slowed. It conceded inflation was up slightly, mostly to due to rising oil prices. Crude oil in New York peaked at $99 a barrel on Sept. 14. Brent crude peaked at 116.66 a barrel the same day.

At the same time, however, housing has just started to show signs of recovery. New-home sales in September hit their highest levels since the spring of 2010, the Commerce Department said today. Consumer spending has picked up some steam, the statement said.

The Fed has assumed a more activist role in trying to turn what has been a mediocre recovery into something substantial. That's because the Obama administration and Congress can't agree on a fiscal strategy to move the economy to a higher level.

In addition, there are big concerns that U.S. manufacturing is slowing down and that problems in Europe and Asia are affecting business at home. The third-quarter earnings season has disappointed many investors. Many companies have missed revenue estimates and offered weak guidance for the coming months.

The statement did not shed light on how deep the divisions are in the FOMC. Only Jeffrey Lacker, the president of the Richmond Federal Reserve Bank, dissented. He has opposed the Fed's buying $40 billion in mortgage securities and reinvestment of $45 million from maturing securities. He also thinks the Fed should put no deadline on how long it will keep rates low.

Facebook's big gain
Facebook surged $3.73 to $23.23 -- and reached as high as $24.25 -- after the social networking company grew mobile advertising revenue several times in the third quarter, a much quicker pace than expected.

Besides posting quarterly results that inched past Wall Street's expectations, the company said it generated nearly $153 million in revenue from mobile advertising.

That cheered investors, who have wondered if anyone can make money from ads sent to smartphones.

Panera sees a decent 2013
Panera Bread shares were up $8.09 to $168.43. The restaurant company's third-quarter results beat Street estimates. It also guided higher for 2013.

Panera's report contrasted with other high-growth chains like Chipotle Mexican Grill (CMG) and Buffalo Wild Wings (BWLD), which disappointed investors with their recent results.

Chipotle fell 15% after it reported disappointing earnings last week. It was up $6.58 to $242.82 today. Buffalo Wild Wings was off $8.76 to $74.70 after it said higher costs will trim earnings.

Netflix struggles with streaming subscriptions
Netflix shares fell $8.10 to $60.12 after the DVD-rental and video-streaming company lowered its forecast for streaming subscribers for the year. It's the worst performer among S&P 500 and Nasdaq-100 stocks.

Along with its latest quarterly results, released late Tuesday, Netflix said it now expects to end the year with between 26.4 million and 27.1 million streaming subscribers. That would give the company a gain of 4.7 million to 5.4 million subscribers this year. Netflix had earlier forecast a gain of 7 million subscribers.

Countrywide rears its head again for Bank of America
The federal government filed a civil lawsuit against Bank of America (BAC), alleging the banking giant's Countrywide subsidiary saddled taxpayers with losses by misrepresenting the quality of home loans it sold to mortgage-finance companies Fannie Mae (FNMA) and Freddie Mac (FMCC). The suit says Countrywide engaged in "brazen fraud."

The action, filed today in New York City, seeks at least $1 billion in damages. The filing represents a novel effort by the government to defray costs tied to the 2008 bailout of Fannie and Freddie, and potentially opens a new front against a banking industry already dealing with hefty legal costs.

The government alleges Countrywide Financial, the mortgage company Bank of America acquired in 2008, dismembered quality control and checks on loan quality in 2007 through 2009, in a process called "the Hustle" that aimed to boost the speed at which it originated and sold loans to the companies. The mortgage unit falsely continued to claim the loans qualified for insurance from Fannie Mae and Freddie Mac, the complaint alleges.

Bank of America shares closed down 5 cents to $9.31. Bank officials have conceded that they wished they hadn't taken Countrywide over. The deal has resulted in endless litigation costs relating to the housing bust.

Boeing boosts its outlook
Boeing started the day strongly, but shares fell 11 cents to $72.71. The commercial jet and defense giant reported better-than-expected earnings and raised its full-year 2012 outlook. The shares had reached as high as $75. The outlook bucked a recent trend by companies with large global footprints cutting their full-year forecasts. These include DuPont (DD), United Technologies (UTX) and 3M (MMM).

AT&T
(T) posted third-quarter revenue that was below analysts' expectations, but its earnings increased from a year earlier. Shares lost 29 cents to $34.71.

The Dow Jones Transportation Average ($DJT) was down 103 points to 5,005 after Norfolk Southern (NSC) said quarterly profit fell on lower shipments of coal and merchandise. Its shares slumped $4.92 to $61.09. Shares of C.H. Robinson Worldwide (CHRW), another component in the transportation index, fell $3.43 to $57.55.

Short hits from the markets -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.1100%

0.090%

22.22%

1000.00%
5-year Treasury note 

0.748%

0.758%

18.73%

-9.88%
10-year Treasury note

1.775%

1.764%

8.43%

-5.13%
30-year Treasury bond

2.933%

2.916%

-3.27%

1.52%
Currencies











U.S. Dollar Index

80.015

80.080

-0.01%

-0.63%
British pound

1.6038

1.5959

-0.75%

3.22%
(in U.S. $)

 








U.S. $ in pounds

£0.623

£0.627

0.76%

-3.12%
Euro in dollars

$1.30

$1.30

0.86%

0.05%
(in U.S. $)

 








U.S. $ in euros

€ 0.771

€ 0.770

-0.85%

-0.05%
U.S. $ in yen 

80.00

79.87

2.60%

3.76%
U.S. $ in Chinese

6.27

6.25

-0.20%

-0.90%
yuan











Canada dollar

$1.009

$1.008

-0.77%

2.83%
(in U.S. $)

 








U.S. dollar 

$0.992

$0.992

0.88%

-2.73%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,701.60

$1,709.400

-4.08%

8.60%
(per troy ounce)

 








Copper (-HG)

$3.568

$3.570

-5.06%

3.84%
(per pound)

 








Silver (-SI)

$31.6200

$31.793

-8.55%

13.27%
(per troy ounce)

 








Wheat (-ZW)

$8.8400

$8.688

-2.05%

35.43%
(per bushel)

 








Corn (-ZC)

$7.5450

$7.560

-0.23%

16.71%
(per bushel)

 








Cotton 

$0.7267

$0.743

2.86%

-20.74%
(per pound)

 








Coffee

$1.5980

$1.609

-7.90%

-30.42%
(per pound)

 








Crude oil (-CL)

$85.73

$86.670

-7.01%

-13.26%
(per barrel)










 

555Comments
Oct 24, 2012 5:11PM
avatar
The unbelievable levels of hate these two Presidential candidates generate has proven without a doubt that neither are acceptable. Aggressive supporters attack each other like mobsters instead of responsible voters debating principles and directives. Regardless of the outcome, we all loose...       
Oct 24, 2012 5:08PM
avatar

Another Evil Chris Prediction - ABS

Today around 6:00pm he will turn off his computer after a "job well done" of trolling this site.  He will walk out of his basement, look in the freezer and see his last half empty box of pizza pops which he will then put in the microwave for diner.  He will be eating alone.  While he eats he will look outside and notice that pretty 16 year old girl outside, he has grown fond of her.  She will be talking to her boyfriend and that won't sit well with ABS, after all what does that guy have that a real man like him doesn't?  It will be dark soon so he will head to his room (going past the rarely used shower) and turn on the TV.  He will put in his fav Jap animation porn.  Over the course of the next 5 or 6 hours he will pleasure himself 3 or 4 times.  He will then check his emails, he has none.  After that he will complete his nightly ritual of crying himself asleep..... alone.

Good night and let the market go up tomorrow.

Oct 24, 2012 5:05PM
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I figured Old Bill was on his 4th. or 5th. black book by now?
Oct 24, 2012 4:58PM
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Well, maybe I should get off of here, instead of peeing on people...When they deserve it.
Oct 24, 2012 4:56PM
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You guys should see Clintons binders full of women.....    Amazing.
Oct 24, 2012 4:54PM
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Another arrest was made today regarding the attacks in Libya........
Oct 24, 2012 4:50PM
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Alias, you ask me for proof that thousands of Americans die each year from lack of insurance.

A 2009 Harvard Medical School study shows that about 45,000 Americans die each year from lack of insurance coverage, look it up.

Oct 24, 2012 4:42PM
avatar

Classic...Where the hell do you get this information ???

 

We had absolutely NO WAY or opportunity to take care of the attack in Libya, while it was happening...

And they were Contractors guarding the Embassy..Or the SAFE HOUSE..

 

Ever go into the "HOOD, trying to get information, after a 12 year old kid has been shot dead...??

Probably not ?.....They clam up like puckered azzholes.

Oct 24, 2012 4:34PM
avatar

FREDDY.....What was that suppose to mean ??

First you have been telling....Everybody, and then they quit posting....??

 

I'm very curious if you went to school and where...??

You stated that Palin was/is "dumb as a rock"...

Then you went on babbling about Obama and Biden are dumber then her...??

Out of the three(3) one is the President, one is the Vice President and Leader of the Senate..

And the last one is: "still dumber then a rock."

Which school do you propose we attend or go to ??

ACTUALLY TELL US, WHICH SCHOOL TO NOT ATTEND...Thank you, Freddy.

Oct 24, 2012 4:32PM
avatar

"...Romney takes over and the market shoots to 15,000 almost immediately"

 

 

Thats EXACTLY what WE DON'T NEED YOU SCUMBAG FLOOR TRADER!

 

Wall Street IS THE PROBLEM!!!

 

The Money needs to be returned to MAIN STREET!

Oct 24, 2012 4:30PM
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This site is not allowing present posts as given at time of post.  Take it for what is it worth.  They past after.....not very smart.

Oct 24, 2012 4:27PM
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Since the Fed can't take the rates any lower ..... there is nothing that we can do but sit and watch the horror show. Stocks will continue to tank, the economy is already in the toilet and with Obama's spending so that the country is almost bancrupt, inflation will really start to jump. This is Jimmy Carter all over again. Go back and look at Carter's Presidency. It is so much like Obama's it's scarey. And Carter was considered the worst Pres in history. Well now he has competition!!! Barry is winning that clusterf*ck!!
Oct 24, 2012 4:21PM
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ABS.........Now don't piss me off....Because your Mom,should have been asking about Condoms years ago....Tell her I'm sorry...If she is gone,(like my Mom) tell her the next time you vist the cemetary.
Oct 24, 2012 4:21PM
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Koo dude, you're funny too.  I say this all the time, but you need to go to school and learn something before you post on here.  I told it to Pete, and he must have learned something, because he doesn't post on here anymore.  I told it to Empty, and I don't see him on here anymore.  I'll give you palin is dumb as a rock, but she is smarter than both biden and obama, so where does that put the liberal party????  If your smartest is dumber than the GOP dumbest, your whole fking party is in trouble.
Oct 24, 2012 4:19PM
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I have never seen a political party so desperate.  So desperate for four more years of screwing us and destroying our country.  There's a lot too what obama whispered to the soviet presdient.  No telling how many other ears he's been whispering into?  His agenda is no good for us.  That's why he hasn't one.  Not to mention he walked away from four Americans in Benghazi.  Wish they could have their say about this so in loved with president!
Oct 24, 2012 4:18PM
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Well, no big surprise, we kept saying it all day...Low volume and manipulators in control on and off the floor makes for a bad combo...Lucky we didn't drop triple digits once again....Hate to say this but this market is starting to look like the economy now, crappy...Scumbags love every minute of it...Like the Fed said, the job market is bad, this administration hasn't created a single net job...No wonder the economy is in the toilet...And everyone here on the floor knows it well....Four more years of Obama would be a disaster....Like we said before...Romney takes over and the market shoots to 15,000 almost immediately...That's just the way it is. What to expect tomorrow? This is now an extremely oversold market, we should rebound, however, there will be a lot of scumbags doing their best for this not to happen...Oh well...We will see.
Oct 24, 2012 4:17PM
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My Question is that QE1 did nothing ! QE2 did nothing ! And QE3 is doing nothing but fuling credit and debt ! Pumping all this money thats borrowed is doing nothing because all the so called job creators on wall street with their free money and tax cuts have FAILED the USA and is not working ! Over a DECADE of this policy is no good and has done nothing people !!! For unemployment or inflation ! The Feds exclude food and energy in their inflation numbers America.. < Real accurate.. LMFAO. We need to return to sound investing principals that we had before ! We need to seperate investment banking from deposits like it was before Clinton and the US CONGRESS changed the law that allowed CITI bank to BUY Travelers insurance company. That made and allowed the great meltdown on wall street! That combined the two investments together , that was separate for over 75 yrs... And kept the banking system sound.  FOX news won't tell you that? LMFAO..
Oct 24, 2012 4:16PM
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Classic....They may be gone from the scene of the crime....

 

But believe you me, we will probably spend millions to apprehend and bring the b*stards to Justice and we will find most of them...

 

BUT, I want ALL YOU NAYSAYERS.....TO TAKE AN OATH NOW....

That if we spend millions, and blow a lot of shidt up, kill a few dozen or a hundred...

Don't come back here crying and biotching about who did it, or how much it cost.

Oct 24, 2012 4:16PM
avatar
It's funny how Republicans all tell a story about mystery Canadians coming to America for operations, but they never want to talk about the thousands of Americans who die each year because they can't afford or can't get insurance coverage here. Our system is badly flawed, when an American gets sick, they lose their job, insurance and pride, then they go on medicare or medicaid and the tax payers have to flip the bill after they lose everything first.
Oct 24, 2012 4:16PM
avatar

"We will correct down soon because Wall Street is shocked that Obama will win again and continue to police them to ensure these crooked immoral bastards never again try to destroy America with their greed and steal from innocent people. However, the long term trend is right back up where the doomsday cult known as the Republican Party will slowly fade from history, never again able to regain and abuse the power they once held to control our government, lie to our people, enrich their friends and manipulate our children with their bogus textbooks and religious propoganda. God Bless Obama!

Thanks to the American people for re-electing our President. FORWARD!!"

 

 

HERE HERE!!   FOUR MORE YEARS!!  FOUR MORE YEARS!!

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