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 1:22PM
avatar

"STATE DEPARTMENT EMAILS obtained by Fox News again challenge Obama administration claims they were in the dark about deadly Sept. 11 terror attack on consulate in Benghazi, Libya — including one email within hours of attack that specifically points to Al Qaeda-affiliated terror group Ansar al Sharia claiming responsibility."

 

It just keeps getting better and better. It's mind boggling to watch the endless spin and lying of the Obama camp, combined with those snarky grins we all saw on both Obama and Biden's faces during the debates, as they had the audacity to try and paint republicans as the liars. Romney is not perfect, but he does have honor and integrity; concepts which are completely foreign to Barrack Obama.

Oct 24, 2012 1:13PM
avatar
This Benghazi scandal is unraveling quickly now, and Obama and Biden are becoming less believable by the hour.  Who's more credible - Obama/Biden on what they knew and when they knew it, or Stevie Wonder as an eye witness to a traffic accident?  At this point, I'm going with Stevie.

For all you young'uns out there, check out "Songs In The Key Of Life", one of the best albums of all time.
Oct 24, 2012 1:31PM
avatar
Do we really want a liar for a president. This story is beyond belief! Don't drink the Obama Kool Aid! By the way the fiscal cliff is coming and I am out of this market and on the sidelines until after the election! Had to lay off three people this last month because business is so bad!
Oct 24, 2012 1:45PM
avatar
"Beginning with their 2014 federal taxes, many consumers who can afford health insurance but decide not to buy it will owe penalties to the Internal Revenue Service when they file their taxes in early 2015. "

Correct me if I'm wrong, but doesn't the Internal Revenue Service collect TAXES?
Obama said it wasn't a tax.................... Did he actually lie???????   .......I'm shocked.....hehe
Oct 24, 2012 1:31PM
avatar

Anothe dumb reason. Home sales are up compared to the last 5 years but hardly robust. The big banks and lenders that got bailed out and wont loan any money, are sitting on forclosed inventory carried at inflated prices. Large , stock holder held, builders are selling at or below cost. They're having a hell of a time with appraisals coming in and people qualifying. All the costs are up for the builders except for land. That's cheaper in most areas because of the horrible downturn.

 

What else do you idiots want to know?

Oct 24, 2012 1:39PM
avatar
Yesterday the DOW dropped well over 200 points and, now today, it is going back up some.  All this proves is we have manipulators on Wall Street.  The DOW goes down to a certain point and then it starts back up to a particular point and then it drops again.  Some would say this is how the stocks work. No, this is showing a pattern and it is caused by manipulating.
Oct 24, 2012 2:05PM
avatar

"Every time that we try to lift a problem from our own shoulders, and shift that problem to the hands of the government, to the same extent we are sacrificing the liberties of our people." --President John F. Kennedy (1917-1963)

Oct 24, 2012 1:37PM
avatar
"STATE DEPARTMENT EMAILS obtained by Fox News again challenge Obama administration claims they were in the dark about deadly Sept. 11 terror attack on consulate in Benghazi, Libya"

The E-mails were provided by an overseas news media source. Imagine that!
Either we're being "Played" by our own media, or they are miserably bad at "Investigative Reporting"!

Hmmmmmm, that's a tough call................ LMMFAO!!!!
Oct 24, 2012 1:49PM
avatar
Who would be stupid enough to buy a home now?Unless your rich and have no fear of the economy! 
Oct 24, 2012 1:22PM
avatar
The Fed due to speak? Nothing new.  
Oct 24, 2012 1:30PM
avatar
V_L Said;
 "Correct... in two weeks we Replace the Party of NO, Root Romney and Release Ryan. America isn't going to vote flip floppers into the White House. Racists might try, but the whole of the nation isn't racist."

So now you're so desperate that you have to pull the Race Card? 
Remember this?     " Wheh's yo dolla?"        Who's REALLY been playing the race card?
 WOW! You're in FULL DESPERATION MODE now! What an AZZ!
LMAO!!!! You ride that Train VL, right to the point of IMPACT!!!!!!!!!!!!!!​​!!!!!!!!!!
Oct 24, 2012 2:07PM
avatar
"First of all, the sequester is not something that I proposed. It's something that Congress has proposed. It will not happen. ... 


Liar.....You already signed the bill and it was YOUR idea.
Oct 24, 2012 2:09PM
avatar

FEC has reported that the Obama campaign has taken out a loan with Bank of America for $15,000,000. 

That's money that B of A will never see again. Dumbazzes.
Oct 24, 2012 2:08PM
avatar
"He didn't point fingers. He didn't place blame. Instead, he got to work, because he was thinking about folks like my dad and like his grandmother. See, and that's why he cut taxes for small businesses and for working families" --Michelle Obama



LOL, that's good one. He 
Oct 24, 2012 1:38PM
avatar
"Facebook is making investors happy today"...Sure, Charlie-I'd like just a little bit of what you're smoking. The only "investors" still left in FB are those who were "Lucky" enough to load up on the IPO. The remainder of those who own the stock have been "averaging down" from the low 30s to the low 20s...For some of these, redemption may seem imminent, but since the markets thrive on fear and greed, I'll bet that the majority of these dupes will continue to hang on (greed) too long and will miss an opportunity to cut losses.  
Oct 24, 2012 1:44PM
avatar
3 QUESTIONS -- 1)An article  on another site said that the USA is becoming the largest oil producing country.So,why are we still paying so much for gas ?? 2)What happened to Netflix?Yesterday it was one of the few companies in the green. 3)The world was all fixed this morning,big rally,and now down to 14 ??
Oct 24, 2012 1:59PM
avatar
al 2010 said;
"One of the central problems of our world today is the increasingly widening gap between rich and poor."

That combined with the increasingly widening gap between the Far Left, and Reality, is a recipe for Obamageddon...........

TWO MORE WEEKS!!!!!
Oct 24, 2012 2:08PM
avatar
CL said:
"WHERE HAVE ALL THE LEFTIE /  LIBERALS  GONE ???????
URENA  1946   TIWIT   LOST   MAX   V L   PETE   
SORRY IF I MISSED ANYONE     LOL"

Obviously, they're huddled up in the "SPIN ROOM" trying to fabricate an updated Untruth!!!!!!!!
Oct 24, 2012 3:10PM
avatar
The FED says the Economy needs HELP? No "S" ! The economy is OFF THE CLIFF! Thanks to their monetary policy! The FED actions have one aim that is to protect the Criminal Banking Cartel and SCREW THE PEOPLE !
Oct 24, 2012 3:02PM
avatar
Libtards have low priorities. They don't care if their PREZ lies to their face....as long as the free sh*t keeps rolling in.
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