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.
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%|
|Heating oil (-HO)||$3.0264||$3.0308||-4.20%||3.85%|
|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; 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.|
|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%|
|U.S. Dollar Index||80.015||80.080||-0.01%||-0.63%|
|(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%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$85.73||$86.670||-7.01%||-13.26%|
DISGUSTING , CORRUPT, LYING, COWARD
Hey , I know -- let's talk about Chicago , or NY or the Yankees or Condoms or Martians, ANYTHING but Benghazi
I don't think so - nice try though !
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..??
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!
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!!
Don't you love these darkies and lefties ?
How many people have you bought since I've been gone?? (Show of hands please)
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.
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??
The ALL were clamoring for Romney's tax returns.
Anything they could get their filthy darkie hands on.
But when it comes to Dear Leader.
B/C - Who cares ?
Transcripts ? - Who cares ?
Deed to his mansion ? Who cares ?
Bill Ayers - Who cares?
Rev: Wrong - Who cares ?
Bengazi ? Who cares?
Answer - WE the people, the tax payers CARE and will show Dear leader how much 11/6.
an epic a$$whipping !
The sugar may be taken back. Sugar daddy is going back to Kenya very soon
TRUMP......Is nothing but a liability to any Polical Party Group...Everyone knows that,,,,,,,;
And the Obama team still use that extreme far left Marxist slogan 'Forward'... Simply fascinating....
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[BRIEFING.COM] Equity indices continue to hold their recent levels with the S&P 500 trading right near its flat line.
The benchmark index has continued its rebound off the midday lows with leadership from cyclical groups. At this juncture, technology (-0.3%) is the only cyclical sector, which remains below its flat line.
On the countercyclical side, health care has trimmed its loss to 0.3% while the consumer staples sector (-1.0%) remains near its session low. Nasdaq ... More
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