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)










 

519Comments
Oct 24, 2012 4:10PM
avatar

Yup Chicago is getting to be mess....Many Large cities the same..Shootings killings every night..

 

And we have people on here blathering about 4 people dying in Benghazi...

Not here to make light of it...But you people really have your priorities screwed up..

 

We know places like Libya and other places in the MidEast and Africa are dangerous...

But seems like many of you have "turned a blind eye" to what's going on at home ??

Were you raised this way....Or don't you give a damn..??

Oct 24, 2012 4:09PM
avatar

THE FUTURE OF THE REPUBLICAN PARTY?

BRISTOL PALIN-Believes in safe sex while mother runs for VP. Dumb as a rock.

Meghan McCain-Believes drugs should be legalized. Dumb as a rock.

Sen. Mourdock-believes rape is God's plan for you. Dumb as a rock.

Gov. Mitt Romney-binders full of women, pathological liar, sociopath, dumb as a rock.

Lyin' Ryan- Mitt's Bobbin' Robin and assistant liar. Religious fanatic. Dumber than a rock.

i could keep going but it is just too evident and too sad. GOP is dead. General Motors is alive!

VOTE OBAMA!

Oct 24, 2012 4:03PM
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!!

Oct 24, 2012 4:00PM
avatar
Think the 4 o'clock hour just rolled over.Guess I had better check on how GOOD everything did today?
Oct 24, 2012 3:57PM
avatar
Mirage Guy said:  Well, we all know what Muslim law will do to women...  Look at Iran...   Obama likes Muslims, and he respects their beliefs...  At least he as said so...  Christians are mild in comparison....  Not that I care about religion....

I guess you have selective memory.....I can recall several instances when the U.S> Christian Taliban have killed Abortion Doctors and Nurses and Gays...........How are Christians Extremist milder?   Christian Extremist KILL.....Death is Death.   Just like their Extremist brothers the MuslimTaliban.....and the Christian Taliban wants to take Over State and the Federal Government to legislate their religious views just like their Extremist brothers in  IRAN...  We also know what the Christian Taliban want to do to American WOMEN.....They want State and Federal Control of Women;s bodies and reproductive Rights......

Oct 24, 2012 3:55PM
avatar
Alias Barry Soetoro

Don't you love these darkies and lefties ?

---------------------------------------------------------------------

How many people have you bought since I've been gone?? (Show of hands please)

Oct 24, 2012 3:47PM
avatar
More major losses in the market today!!!!  Wall Street will end up with no gains this year again.
Oct 24, 2012 3:44PM
avatar
>>> The Federal Reserve said today at least into 2015, and it also said it will continue to buy in billions of dollars of securities each month to boost the economy.

Okay that explains everything and why we have a Dow above 13,000.  They are doing all the buying!  Not you or I.  Something tells me this is not sustainable.  The moment the Fed decides to sell they have enough power to play the scenario of 2008 all over again.  All with just a few mouse-clicks, no less.  Pretty scary.
Oct 24, 2012 3:43PM
avatar

MIRAGE Guy.....I knew it,    I just knew it... You have came around..

 

Two(2) post' AND no mention of "57 Donkeys"...You still in Texas, or move on down to Mexico??

Oct 24, 2012 3:42PM
avatar
Clowns to the left (dems) Jokers to the right (Republicans)   Here i am reading posts from stupid people who has no clue this post is about the Feds ! LMFAO.. But then i doubt anyone on this board has ever read the U.S.Constitution.. Or care that the FEDs are running this country into the ground with their QE B.S. and running and printing money at full speed ! Ben needs to go NOW .. Int rates need to rise at the Fed window on wall street ! And Americans need to regain int on their savings and equity in their home values . Its time for the Feds to STOP all this free money to wall street banks. No one should be able to buy a home without 20% down CASH.. And the U.S. Congress who has been the "tax and spenders" !  need NOT TO RAISE the DEBT limit this yr ! And the fiscal cliff MUST COME... Its time to do this NOW...End all the BUSH tax cuts ... Kill the WARs . And America needs to NOT be the POLICE of the World.. But then im not a DEM or a republican who is scared because they think they are going to trip over an illegal and bump into a terrorist.. LMFAO. I need to remind you flag waving Americans that the Japanese attack our Pacific Fleet 70 plus yrs ago and today i bet you people own a Toyota? I cannot turn a corner without seeing a Japanese car..?? LMFAO.. So kill your FEAR of 9/11 .And your flag waving BS.. LOL People are going to attack Americans in parts of the World we don't OWN... IDIOTS.. Its going to happen no matter who is POTUS... Fools.. But then i guess FOX news won't tell you that? LOL LOL LOL Real hard...   
Oct 24, 2012 3:40PM
avatar
Wall Street is on its way to bust its investers today too even affter good news. Wall Street doesnt want any good news. It is in manipulation mode.
Oct 24, 2012 3:39PM
avatar
Alias Barry Soetoro
Yes, be careful HOW will you eat , cretins?
--------------------------------------------------------------------------
 
Why I'll be dining on croutons Barry, how bout you???
Oct 24, 2012 3:36PM
avatar

TRUMP......Is nothing but a liability to any Polical Party Group...Everyone knows that,,,,,,,;

 

EXCEPT HIM...

Oct 24, 2012 3:34PM
avatar
VolckerFan!!!
Long time no see old friend!
Be careful.... I hear there's going to be a landslide in a few weeks....
 
Oct 24, 2012 3:33PM
avatar

And the Obama team still use that extreme far left Marxist slogan 'Forward'...   Simply fascinating....

Redistribute the wealth....Use government to seize the wealth to take from the working to give to the LEECH class....

We need to terminate the 'food stamp' president...

Oct 24, 2012 3:33PM
avatar

That's what you all wanted....Drones to blow shidt up and get'EM...

 

PLEASE MAKE UP "OUR MINDS" FOR US...OR FIGURE OUT WHAT YOU REALLY WANT ??

Oct 24, 2012 3:30PM
avatar
Mister Kyte said: I guess some people really are just too dumb to realize how ignorant they are. 

You are so dumb you don't know how dumb you are and how dumb that statement is ....Let me educate you....

Being Dumb means lacking intelligence or good judgment; stupid.
Being ignorant means Lacking knowledge, information, or awareness about something in particular..

Better said would have been:  some people are so dumb they don't know how dumb they are.....or some people are so dumb they don't know how stupid their views are.....LIKE YOU.......

Einstein could be consider ignorant on an issue, but never Dumb.......Get it ????



Oct 24, 2012 3:30PM
avatar
Obama blew out Robme twice...You must have Romnesia ??  There fixed it for you.
Oct 24, 2012 3:30PM
avatar

Well, we all know what Muslim law will do to women...  Look at Iran...   Obama likes Muslims, and he respects their beliefs...  At least he as said so...

Christians are mild in comparison....  Not that I care about religion....

The Taliban are very much like Obama and his democrats....trying to enforce their will on others...
Oct 24, 2012 3:30PM
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!

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