Rally collapses after Dow, S&P 500 hit 2012 highs

The Dow falls 68 as profit-taking puts the brakes on the summer rally. Dell's guidance disappoints. Apple nearly hits $675, then slumps. Best Buy shares sag after earnings miss estimates. Gold, silver and oil move up as the dollar falls.

By Charley Blaine Aug 21, 2012 12:23PM
Charley BlaineUpdated: 7:57 p.m. ET

Stocks opened higher today, with the Dow Jones industrials ($INDU) and the Standard & Poor's 500 Index ($INX) hitting new highs for the year.

And then the rally unraveled. Part of the decline was due to a slump in shares of Apple (AAPL), which fell $9.09 to $656.06 after hitting a new intraday high of $674.88.

But profit-taking also appeared to be at work. The Dow and S&P 500 have both gained about 10% since early June, and a number of technical indicators suggested the market was getting pricey. In addition, hopes for more stimulus moves from the Federal Reserve took a blow when Dennis Lockhart, president of the Atlanta Federal Reserve Bank, said he wasn't sure the economy needed more stimulus.

After hours, Dell (DELL) shares were off nearly 4.5% to $11.79 from a regular close of $12.34 after the company issued weaker-than-expected guidance for its fiscal third quarter. Second-quarter earnings beat estimates, but revenue was lower than expected.

The Dow closed down 68 points to 13,204. The loss came after the index had risen as many as 59 points -- well above its 2012 high of 13,279, set May 1. The S&P 500 dropped 5 points to 1,413. It had been up as many as 9 points. The Nasdaq Composite Index ($COMPX) was down 9 points to 3,067.

Article continues below.
The Nasdaq-100 Index ($NDX) was off 12 points to 2,772. Apple, which represents about 17% of the market capitalization of the stocks in the index, was the catalyst for the pullback.

Hewlett-Packard (HPQ), Chico's FAS (CHS), BHP Billiton (BHP), Krispy Kreme Donuts (KKD) and home builder Toll Bros. (TOL) are among the key earnings reports due Wednesday.

The Federal Open Market Committee releases minutes of its July 31-Aug. 1 meeting.  Also due: reports on oil inventories and existing-home sales.

A tough quarter for Dell
Dell said it earned 50 cents a share after one-time charges, down from 54 cents a year ago. Revenue was off 8% to $14.48 billion. The company said revenue from its enterprise solutions and services businesses grew 6% to $4.9 billion -- which is what Dell expects to be its core business going forward.

But the classic personal computer business was weak. Its consumer business was hit hard by the shift to mobile and tablet devices. Revenue was off 22% to $2.6 billion.

Dell expects decent business in the enterprise, services and software businesses. But it also sees "a challenging end-user computer environment" over the next two quarters. Revenue will fall 2% to 5% from second-quarter levels. Dell and Wall Street had expected quarter-to-quarter growth. It cuts its earnings estimate for the year to $1.70 a share, maybe more. Wall Street has been expecting $1.91.

Dell saw revenue declines around the world, but the worst came from Brazil, Russia, India and China (off 15% from a year ago); Asia Pacific and Japan (off 12%) and Europe, the Middle East and Africa (down 7%). Revenue in the Americas was off 6%.

Dell's report weighed on Hewlett-Packard (HPQ), which reports after Wednesday's close. Shares were off 16 cents to $19.93 in regular trading and off an additional 36 cents to $19.57 after hours.

Microsoft (MSFT) was off 12 cents to $30.68 after hours. Intel (INTC) fell 12 cents to $26.11.

Energy prices -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Crude oil (-CL)

$96.68

$95.97

9.79%

-2.18%
(per barrel)











Heating oil (-HO)

$3.1334

$3.0931

10.02%

7.52%
(per gallon)











Natural gas (-NG)

$2.7930

$2.7760

-12.96%

-6.56%
(per mil. BTU)











Unleaded gasoline (-RB)

$3.0730

$3.0308

10.77%

15.64%
(per gallon)











Brent crude 

$114.70

$113.70

9.32%

6.82%
(per barrel)











Retail gasoline

$3.7170

$3.7200

6.20%

13.46%
(per gallon; AAA)












Oil, gold and silver rise as the dollar drops
Commodity prices moved higher in large part because the dollar was lower against the euro. Also, oil and precious metals prices moved higher and speculators pondered the possible effects of an Israeli attack on Iran's nuclear facilities.

Crude oil
(-CL) pushed above $97 a barrel in the morning but settled at $96.68 a barrel, up 71 cents. Brent crude was up 93 cents to $114.63 a barrel. The national average price of gasoline fell slightly to $3.717 a gallon from Monday's $3.72, according to AAA's Daily Fuel Gauge Report.

Gold (-GC) settled up $19.90 to $1,642.90 an ounce. Silver (-SI) jumped 83.5 cents, or 2.9%, to $29.43 an ounce. Copper (-HG) added 8.2 cents, or 2.4%, to $3.453 a pound.

Interest rates were higher, with the 10-year Treasury yield hitting 1.828% from 1.814% on Monday. The 30-year Treasury bond yield was up to 2.937% from 2.927% on Monday.

Best Buy results were expected to be bad -- and were
Best Buy (BBY) shares fell 25 cents to $17.91 after earnings missed Street estimates and concern grew that new CEO Hubert Joly lacked experience with the current retailing environment.

Best Buy reported results that trailed estimates and suspended its earnings forecast as sales of computers and televisions dropped. Same-store sales fell 1.6% from a year ago, with international sales off 8.2%.

The company suspended its share buyback program and said it will no longer issue guidance.

There was some good news, though: The shares hit a 52-week low of $16.25 just after the open but then rebounded.

Barnes & Noble
(BKS) dropped 48 cents to $11.87 because of weakness in its college-textbook business.

But apparel retailer Urban Outfitters (URBN) was up sharply after fiscal-second-quarter results, issued late Monday, were surprisingly strong. Shares were up $5.70 to $36.98, tops among stocks in the S&P 500.

Freeport-McMoRan Copper & Gold (FCX) rose $1.13 to $36.49 as metals prices moved higher.

An early investor in Facebook cashes out
Facebook shares were down 85 cents to $19.16 after trading as low as $18.75 on Monday. The stock was buffeted by news that Peter Thiel, a Facebook director, had sold 20 million shares in the company.

The sale, which realized $395.8 million, had been planned before Facebook went public on May 18, but the news didn't cheer anyone, except maybe Thiel, a hedge-fund manager and co-founder of PayPal, now part of eBay (EBAY).

Thiel was the first outside investor in Facebook, buying a more than 10% stake in 2004 for $500,000.

JPMorgan and Cisco top the Dow
Only nine of the 30 Dow stocks were higher, led by JPMorgan Chase (JPM) and Cisco Systems (CSCO), still basking in the glow of a decent earnings report. Verizon Communications (VZ) and Merck (MRK) were the laggards.

At the same time, 172 S&P 500 stocks were higher, led by Urban Outfitters, solar-panel-maker First Solar (FSLR) and coal-producer Alpha Natural Resources (ANR). Limited Brands (LTD) and Phillips 66 (CLF) were the laggards.

And 43 Nasdaq-100 stocks were higher, led by Green Mountain Coffee Roasters (GMCR) and Netflix (NFLX). Chinese web portal Baidu (BIDU) and Research In Motion (RIMM) were the laggards.



Short hits from the markets -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.1000%

0.090%

0.00%

900.00%
5-year Treasury note 

0.792%

0.792%

32.22%

-4.58%
10-year Treasury note

1.805%

1.814%

20.98%

-3.53%
30-year Treasury bond

2.909%

2.927%

12.88%

0.69%
Currencies











U.S. Dollar Index

81.92

82.500

-0.96%

1.74%
British pound

1.5783

1.5716

0.65%

1.58%
(in U.S. $)

 








U.S. $ in pounds

£0.634

£0.636

-0.64%

-1.55%
Euro in dollars

$1.25

$1.24

1.37%

-3.77%
(in U.S. $)

 








U.S. $ in euros

€ 0.802

€ 0.810

-1.35%

3.91%
U.S. $ in yen 

79.55

79.48

1.84%

3.18%
U.S. $ in Chinese

6.38

6.36

0.34%

0.85%
yuan











Canada dollar

$1.015

$1.012

1.84%

3.50%
(in U.S. $)

 








U.S. dollar 

$0.986

$0.988

-1.73%

-3.38%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,640.90

$1,623.00

1.89%

4.73%
(per troy ounce)

 








Copper (-HG)

$3.453

$3.371

1.04%

0.49%
(per pound)

 








Silver (-SI)

$29.4280

$28.5930

5.42%

5.42%
(per troy ounce)

 








Wheat (-ZW)

$9.0275

$9.0275

1.63%

38.30%
(per bushel)

 








Corn (-ZC)

$8.2375

$8.238

2.30%

27.42%
(per bushel)

 








Cotton 

$0.7730

0.7483

8.35%

-15.68%
(per pound)

 








Coffee

$1.6420

1.6455

-5.85%

-28.50%
(per pound)

 








Crude oil (-CL)

$96.68

$95.97

9.79%

-2.18%
(per barrel)










 

284Comments
Aug 21, 2012 3:04PM
avatar
GOP pressures Akin to quit. 

Barney Frank is busted running a gay prostitute service out of his home and the DEMS say so what, don't leave us Barney. We love you. 

Ted Kennedy gets drunk and kills his mistress, does not report it for 48 hours, does not spend a minute in jail and goes on to win how many senate races? 





Aug 21, 2012 12:47PM
avatar
They still haven't learned that ripping us off at the gas pump is N O T  the way to build the economy back. Sad :(
Aug 21, 2012 3:02PM
avatar
How is that "Hopey, Changie thing working out for ya?"  LOL

Hunker down...things will get way worse if Owebama wins.   If you have a small business it is the perfect time to dump your healthcare costs.  Drop your coverage and be rid of the headaches and never have to negotiate another contract again.  Best part, you get to pocket all the insrance money, less the fine for not providing coverage.  If you hurry, yo can do it before the election, so all your employees can voice their approval of Obummercare at the ballot box.  

Thanks Obama, I might break down and buy a new fishing boat with the money.  Company needs a fishing boat...
Aug 21, 2012 2:58PM
avatar
USA Today
redreka Schouten and Christopher Schnaars, USA TODAY

 "Obama has outspent Romney $325 million to $165 million so far. Yet the race is currently a dead heat. He's spending money faster than he can collect it."



HAHAH....he runs his campaign just like he runs the country.....into debt.
Aug 21, 2012 12:39PM
avatar
STOCKS UP BUT THE ECONOMY DOWN! WHAT?
Aug 21, 2012 12:43PM
avatar
Stocks and oil are up, but the dollar and the economy are way down??
Aug 21, 2012 2:47PM
avatar
off limits -

Eric Holder, Bill Ayers, Rev Wright, School records, medical records, Fast and Furious, transparency, lobbyist in the white house, Biden's racist remarks, ObamaCare is a tax, stimulus waste, ethanol subsidizing, Keystone Pipeline, gas prices, Iran, Israel, executive orders, illegal immigration

Fair points -

Tax returns and where dogs go on vacation
Aug 21, 2012 1:05PM
avatar
Charley, welcome!  Keep that "smile", buddy!  Just letting you know....it is not working anymore And the bogus nonsense you feed us should have stopped long ago.  Do you get paid that much to do this?  Our economy is in the tank....pure and simple.  How in the H do you live with yourself!   No vendetta against you or any of the other "pundits" here, but.....give it a rest with the BS.  We are not that stupid!
Aug 21, 2012 3:22PM
avatar
Uh oh.....Romney takes slights leads in Michigan, Wisconsin, Ohio and Florida. 

Obuma better dig up some more dirt....the actual issues are not on his side.
Aug 21, 2012 3:10PM
avatar
Classic case of the "chicken syndrome", one clucks and they all cluck, but none really know why.  Traders are such tools.
Aug 21, 2012 3:21PM
avatar
Ok....funniest article on here today....  The NY Times wants to be relevant again?   LOL...

Print media and especially extreme far left Marxist rags like the NY Times are done.   Only the stupid will continue to read those...
Aug 21, 2012 5:01PM
avatar

>>>Obama ia out make thisis country a socialisr state  Look at his teachers and upbring<<<

 

There's just so much wrong with that, and on so many levels.  Where do you start?

Aug 21, 2012 2:36PM
avatar
You know a candidate is scared when he plays either the race card or the draft dodger card. 
Aug 21, 2012 2:58PM
avatar
Do you hear it? That sound. Its a train sound. Its the tax payer money train coming in with another load of money. Get ready for the market to go up here shortly. Oh the sweet smell of hope. You know the hope we can con you into puting your money back in.......
Aug 21, 2012 3:45PM
avatar
Obama the first black president,and a poor choice at that he will take  blacks as well as white down in  flames. He is the first US president out to destroy this great country.  And to those who support him what good has he done, really tell me?  Obamacare you say,  well at a critical time when our country is in great debt, it is a program we cannot afford! 
Aug 21, 2012 12:57PM
avatar

Someone wrote: "Stocks and oil are up, but the dollar and the economy are way down??"

When you think about all this, it is easy to understand: Obama is leftist,  the democrats are leftists, the medias are on the left, then the boat is tilting on the left and so is going the economy...to the left....in the ditch......the more on the left...the more left it goes....

 

Republ......ICAN

Democ......RATS......remember November is the rodent's removal month.

Aug 21, 2012 3:34PM
avatar
Did anyone notice the NYTimes poll yesterday that Obama was losing his HOME STATE and Crook County/Chicago 38/62?   That is a stunning number.  Is Illinois in play?

The poll was heavily centered in Chicago.  If it is accurate Obama is finished.
Aug 21, 2012 2:50PM
avatar

all those of money fled the war.  recall college was a way to delete or side step serving in the war.  so who went to college?  those with money. 

 

i consider these college deferements as a root cause for today's education troubles.  people went to college to avoid the war.  and within college the education degrees are among the easiest to get.  i noted a flood of guys graduating and teaching us in junior high and high school.  only there because it was better than getting shot at (i didn't go to an inner city school). 

 

in time these guys became school administrators.  only there for the buck, not because they had any passion for education

Aug 21, 2012 4:41PM
avatar
Well, like we said last night after the close, today manipulators would come out with guns blazing...After 6 positive weeks, scumbags couldn't wait...Its ok. we need a day like today to climb higher....We started the day with a sucker's rally, we were up about 55, that's when we warned and advised caution....At about 1100 hrs they called for the first wave of selling and at 1300 hrs they accelerated and, thats all she wrote...Oh well, cant go up every day, have to throw this dirt bags a bone every so often....Lets see what happens tomorrow. Today we had a day that reminded us of what's happening outside of WS, horrible economy.
Aug 21, 2012 5:00PM
avatar

 "hopes for more stimulus moves from the Federal Reserve took a blow when Dennis Lockhart, president of the Atlanta Federal Reserve Bank, said he wasn't sure the economy needed more stimulus."

 

This is all that is driving anything right now.  Any misplaced comment can turn the market on a dime.  Tomorrow, some central banker in Europe or China will say something different and the lemmings will all follow.

 

I wish I could trust the markets again but this is all too easy to rig. 

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