Dow off 54 after midday rebound fades

The blue chips sag after an IMF offer to help nations caught up in Europe's woes proves limited. Hewlett-Packard sags on an earnings warning. Merck pays $950 million to settle Vioxx issues. Stocks look to open lower on Wednesday.

By Charley Blaine Nov 22, 2011 2:34PM
Charley BlaineUpdated: 3 a.m. ETWednesday

Stocks slumped badly today until the International Monetary Fund announced it was extending a new credit line to help countries caught up in Europe's debt-and-banking crisis.

There was a brief but strong rebound, but then stocks drifted lower for the rest of the day when it became clear the IMF move was not meant to help Italy, Greece or Spain. It appeared aimed at countries in good financial shape but nonetheless affected by the crisis.

Result: The Dow Jones industrials ($INDU) fell for the fourth time in five days. The Standard & Poor's 500 Index ($INX) and the Nasdaq Composite Index ($COMPX) suffered their fifth straight losses.

The market had opened lower as investors were dismayed by a new report showing third-quarter economic growth was less than had been thought. In addition, earnings from Hewlett-Packard (HPQ) disappointed.

The Dow closed down 54 points to 11,494. The S&P 500 slipped 5 points to 1,188. The Nasdaq dropped 2 points to 2,521.

Article continues below.
The Nasdaq-100 Index ($NDX), which tracks the largest  Nasdaq stocks, was up 5 points to 2,216.

Gains for Nvidia (NVDA), Apple (AAPL), Gilead Sciences (GILD) and Whole Foods Market (WFMI) were offset by losses in Oracle (ORCL), Microsoft (MSFT), Intel (INTC) and Amazon.com (AMZN). (Microsoft is the publisher of MSN Money.)

A weak open ahead?
Futures trading suggests a down open on Wednesday, with the Dow opening down some 95 points and the S&P 500 dropping nearly 12 points.

One reason for the pullback was a surprisingly disappointing report on Chinese manufacturing. It raises the odds that China may be forced to cut interest rates sooner than expected to offset the impact of a slowing global economy.

A second issue was that Belgium might not be able to come up with the cash to finance a bailout of French-Belgian bank Dexia.

The big earnings report is Deere (DE), the maker of farm and construction equipment. The government will report on initial jobless claims, durable goods orders and personal income and spending. The University of Michigan will report on consumer confidence.

Markets will close Thursday for Thanksgiving. Trading will be open until 1 p.m. ET on Friday.

Many worries push stocks lower
The market's loss came despite an observation from the minutes of the Federal Reserve Board's Nov. 1-2 meeting of "reduced odds that the economy would slide back into recession economy." (To be fair, the Federal Open Market Committee also saw considerable downside risks, including Europe.)

Meanwhile, the Fed said it will launch new bank stress tests in which lenders will be forced to model a severe eurozone recession.

That means a a 6.9% decline in real gross domestic product and a skying domestic unemployment rate. In addition, the six largest U.S. banks will need to estimate losses "stemming from a hypothetical global market shock," similar to that of late autumn 2008.

Still, a lot of wariness remains in the market. Many investors were still dismayed that the congressional supercommittee couldn't come up with a workable plan to trim federal deficits, and there were continuing worries about Europe. European bank stocks, in particular, were weak.

In addition to unhappiness with Hewlett-Packard, investors were dismayed by quarterly results from Campbell Soup (CPB), Chico's FAS (CHS) and dental-equipment supplier Patterson Companies (PDCO).

But earnings from Medtronic (MDT), shoe retailer Genesco (GCO) and jewelry retailer Signet Jewelers (SIG) cheered the Street.

So far, the Dow is off 3.9% in November, with the S&P 500 off 5.2% and the Nasdaq down 6.1%.

Pandora earns a small profit, sees small loss in 4th quarter
After the close, Pandora (P), the Internet radio service reported that it broke even under generally accepted accounting and 2 cents a share after one-time charges in its fiscal-third quarter. Revenue was up 99% to $75 million, mirroring gains in listers and listenership.

Investors weren't impressed. The shares were off nearly 3% after hours to $11.50 after falling 5.4% to $11.85.

For the fourth quarter, the company sees non-GAAP earnings ranging from a loss of 4 cents a share to a loss of 2 cents. Revenue will range from $80 million to $84 million.

Pandora went public this spring in a widely watched initial public offering at $16. As of today's close, the shares are down 26%.

Energy prices -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Crude oil (-CL)

$98.01

$96.92

5.17%

7.26%
(per barrel)











Heating oil (-HO)

$3.0346

$2.9943

-0.77%

19.30%
(per gallon)











Natural gas (-NG)

$3.4150

$3.3990

-13.19%

-22.47%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.5650

$2.4987

-1.56%

4.56%
(per gallon)











Brent crude 

$109.03

$106.88

-0.48%

15.07%
(per barrel)











Retail gasoline

$3.3400

$3.3510

-2.99%

8.72%
(per gallon; AAA)












Euro rallies; gold and oil rise
As stocks floundered, the euro rallied a bit -- usually good for U.S. stocks. In this case, however, commodities moved up.

Crude oil (-GC) settled up  $1.09 to $98.01 a barrel. Gold (-GC) added $23.80 to $1,702.40 an ounce. Silver (-SI) rallied $1.835 to $32.951 an ounce. Copper (-HG)added 3 cents to $3.333 a pound.

Oil's gain -- its first in four days -- came as new sanctions were imposed against Iran and protests in Egypt raised concern that supplies will be disrupted.

Gold's rally was fueled by the breakdown of the supercommittee efforts.

The 10-year Treasury yield was down to 1.939% from Monday's 1.962%.

Hewlett-Packard's weak outlook

The computer maker said fiscal-fourth-quarter earnings fell from a year earlier but still topped Wall Street's expectations. HP said adjusted earnings per share fell 12% from last year to $1.17 per share. Adjusted net revenue for the quarter ended in October dropped 3% to $32.3 billion. Analysts were expecting profit of $1.13 a share on sales of $32 billion.

HP shares fell 0.8% to $26.65.


As important was the company's guidance for its 2012 fiscal year. It now expects $4 a share in earnings. That was lower than the consensus estimate of $4.56.

“I’m optimistic that we’ll be able to turn this around," CEO Meg Whitman told CNBC today, "but we have some real head winds going into 2012." Europe is a big issue and likely to get worse. How does HP know? Ink sales for ink-jet printers have proved to be a great early indicator, Whitman said. And ink sales in Europe are weak.

GDP is revised lower

The Commerce Department said its second estimate of U.S. gross domestic product growth for the third quarter came in at 2%. That was down from the previous estimate of 2.5%. A poll of economists by Reuters expected a 2.5% annualized growth rate. 

 

Much of the decline was due to cuts in inventories. Many analysts see inventories getting rebuilt in the fourth quarter and helping boost gross domestic product by as much as 3%.

 

Leaders and laggards
Netflix (NFLX) shares were down 5.4% to $70.45. The company is raising an additional $200 million in capital through the sale of zero coupon convertible notes. Technology Crossover Ventures will be buying the notes, and has the right to nominate one person to Netflix's board. The stock was falling 2.1% to $72.89.

Medtronic (MDT) climbed 4.5% to $34.75 for the third-biggest gain in the S&P 500. The world’s biggest maker of heart-rhythm devices reported second-quarter earnings that beat analysts’ expectations on rising international sales of cardiovascular and spinal products.

Signet Jewelers (SIG) slipped 0.3% to $43.42. The retailer of jewelry and watches, best known for the Jared chain, reported third-quarter earnings excluding some items of 30 cents a share, beating the average analyst estimate by 44%.

Genesco (GCO)rose 3.1% to $57.84. The owner of Journeys and Johnston & Murphy shoe stores boosted its full year earnings outlook to at least $3.64 a share from at most $3.42 a share.

Campbell Soup (CPB) fell 5.3% to $31.84, the most among S&P 500 stocks. The world’s largest soup maker reported fiscal-first-quarter sales of $2.16 billion, trailing the average analyst estimate by 2.4%, according to Bloomberg data.

Chico’s FAS (CHS) dropped 14.4% to $9.94. It hit a 52-week low of $9.57. The women’s clothing retailer reported third-quarter earnings excluding some items of 18 cents a share. The Street had been looking at 20 cents.

Frontline (FRO) slumped 41% to $3.06. The world’s biggest operator of supertankers reported a third-quarter loss and said it may run out of cash next year unless the market recovers.

Fusion-io (FIO) slipped 12.6% to $31.65. The maker of flash-memory technology and its shareholders offered to sell 8.84 million shares at $33 each.

Merck's big settlement on Vioxx
Pharmaceutical giant Merck (MRK) will pay $950 million to settle criminal and civil charges that it illegally promoted the painkiller Vioxx, the Justice Department said today. Shares fell 1% to $33.81.

Merck will plead guilty to a misdemeanor offense and pay a $321.6 million criminal fine. Under the terms of a civil settlement, Merck will pay $628 million to resolve additional allegations on off-label marketing of Vioxx and false statements about the drug's cardiovascular safety, the department said.

The plea and settlement resolve a long-running investigation into Merck's marketing of Vioxx, which was withdrawn from the market in 2004.

A bias to the downside
Only eight of the 30 Dow stocks were higher, led by Chevron (CVX), up 0.8% to $96.42, and Kraft Foods (KFT), up 0.7% to $34.55. Alcoa (AA) and Bank of America (BAC) were the laggards, down 2.2% each to $9.26 and $5.37, respectively.

Only 44 S&P 500 stocks were higher, led by Gilead Sciences, up 6.9% to $38.76, and Biogen Idec (BIIB), up 5.2% to $113.50. The laggards were First Solar (FSLR), down 6.3% to $40.80, and Netflix.

Gilead and Biogen Idec were the Nasdaq-100 leaders; First Solar and Netflix were the laggards.

Short hits from the markets -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0200%

0.010%

100.00%

-83.33%
5-year Treasury note 

0.885%

0.906%

-12.46%

-56.10%
10-year Treasury note

1.939%

1.962%

-10.85%

-41.33%
30-year Treasury bond

2.910%

2.945%

-9.03%

-33.29%
Currencies











U.S. Dollar Index

78.435

78.463

2.79%

-1.08%
British pound

1.5632

1.5645

-2.81%

0.17%
(in U.S. $)











U.S. $ in pounds

£0.640

£0.639

2.90%

-0.17%
Euro in dollars

$1.35

$1.35

-2.50%

0.99%
(in U.S. $)











U.S. $ in euros

€ 0.740

€ 0.741

2.56%

-0.98%
U.S. $ in yen 

77.10

76.93

-1.70%

-5.24%
U.S. $ in Chinese

6.38

6.36

0.10%

-3.51%
yuan











Canada dollar

$0.965

$0.000

-3.63%

-3.88%
(in U.S. $)











U.S. dollar 

$1.038

$1.039

3.77%

4.04%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,702.40

$1,678.60

-1.32%

19.77%
(per troy ounce)











Copper (-HG)

$3.333

$3.303

-8.23%

-25.05%
(per pound)











Silver (-SI)

$32.951


$31.1160

-4.08%

6.51%
(per troy ounce)











Wheat (-ZW)

$5.9400

$5.9150

-5.45%

-25.21%
(per bushel)











Corn (-ZC)

$5.9900

$5.98

-7.42%

-3.78%
(per bushel)











Cotton 

$0.9112

0.9041

-10.92%

-37.08%
(per pound)











Coffee

$2.3690

2.37

2.82%

-1.50%
(per pound)











Crude oil (-CL)

$98.01

$96.92

5.17%

7.26%
(per barrel)










 

83Comments
Nov 22, 2011 3:41PM
avatar
The only "market" I am interested in right now is the "supermarket" that has my 22 pound turkey waiting for me so I can eat like a pig on Thanksgiving & forget all this stock market nonsense.
Nov 22, 2011 3:20PM
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Read an interesting article this morning titled "It's Over" by Carl Denninger. He says MF Global is the straw that broke the camel's back. People now realize that their money is not safe; that regulatory agencies are not enforcing rules; when fraud and malfeasance are brought to light, no one is held accountable; and as a consequence, the little guy is "gettin outta Dodge".

 

avatar
ROFL,

Yep the IMF is going to use phony SDR money to bail out Europe. Their $328 billion is going to last about two weeks keeping the lazy French,Italian,Spani​sh,Greek,Irish in beer and cheese as they refuse to work. Everyone in Europe is either working directly for the government or on welfare why do you think they are running such high deficits??

The IMF is funded by the same broke European countries it is trying to bail out. This is going to be tragic to watch.

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. With a general SDR allocation that took effect on August 28 and a special allocation on September 9, 2009, the amount of SDRs increased from SDR 21.4 billion to around SDR 204 billion (equivalent to about $328.3 billion, converted using the rate of August 31, 2011).
avatar
There is only one Fed number that means anything and that is the interest rate.

Look folks a Fed rate of zero means the US economy is on it's death bed and not getting up. Unemployment will remain near double digits and under employed people will remain at 21 percent. The Government will continue to lose about $2 trillion a year. The economy will not get better despite what the government says about it.  

A Fed rate of 5 percent means the economy is robust and healthy and growing by leaps and bounds and producing jobs and wealth at a great clip. 

Until the Fed starts to move up the Fed rate they are telling us the US economy is dead.

Worries about debt problems in the United States and Europe pushed the benchmark S&P 500 down more than 5 percent over the past week.

"Maybe some things are calming down in Europe. That was the reason for yesterday's selloff. It may be people kind of reassessing their reaction to Europe news and just coming back to basically the U.S. numbers having been pretty decent for about a month now," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

"A lot will depend on the FOMC minutes that come out later today."

Nov 22, 2011 3:42PM
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"OIL is up because of concern about Iran sanctions and Eygpt??!?
WTF these countries barely produce and have litlle to nothing to do with opecs output! To say this is raising prices is ridiculous! The Dollar is up which indicates prices SHOULD DROP!
THis is all SPECULATION caused by OIL PROFITEERS! Get SMART AMERICA insist your representatives STOP THIS PROFITEERING before it destoys our economy! THESE GREEDY pricks care nothing about the American people.. Where else, but america can the Cheney get away with shooting 2! not one of his "friends" in "HUNTING ACCIDENTS"... MY GOD i would NEVER walk in front of that greedy prick...and those are his supposed friends LOL
Nov 22, 2011 4:15PM
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this is all part of the smoke and mirror crap from the government they dont want you think about what they are not doing so this way they can keep you getting upset about the stock market.

 

Get a clue these clowns in washington are ruining this country not just obama with obamacare but the rest of the LIERs in Washington.

avatar
Well so much for any Christmas!!!! Even if the market rallied threw the end of the year it wouldn't make up a 15-20% money loss for the year. It will be lucky to even make it up by the end of 2012. At least we don't have to spend anytime running around looking for presents this year. Saves on gas
We have not even come close to breaking even since DEC 1999 when the DOW was 11,474 considering inflation and the drop in value of the dollar the DOW would have to be about 24,000 just to break even. 
Nov 22, 2011 7:22PM
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If Americans re elect Obama in 2012, and he continues to do what he is doing now, well frankly.............​.don't complain when you have NOTHING. He does not have the knowledge or the demeanor to lead this country, Everything he has done has been a disaster. 4 more years of this will be our total ruin.
Nov 22, 2011 3:15PM
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AMERICAN POLITICIAN = BOUGHT AND PAID FOR BY CORPORATE AMERICA   GO FIGURE ? CAPITALISM AT ITS FINEST  !!!
Nov 22, 2011 3:51PM
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STOCKS CLIMB OUT OF DEEP HOLE!! I dint see the Dow go up 20% this afternoon?? This is a bigger money loss than 2008!!!
Nov 22, 2011 3:34PM
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"The market had opened lower as investors were dismayed by a new report showing third-quarter economic growth was less than had been thought."

 

 

Translates to last months lies where now made aware of....I watched the pundits this morning on CNBC and they were all arguing about the IMF nonsense and i watched how the DOW went up when one guy talked then back down after another guy wieghed in...TOTAL JOKE!

Nov 22, 2011 3:35PM
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Up...down...up...dow​n... until we address our debt crises one way another, investors will be in limbo.  The market is going to bounce between 11,000 and 13,000.  The day we make the necessary cuts is the day the market takes off to new heights.
Nov 22, 2011 6:10PM
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MirageGuy...

 

I have never taken a poster to task before...But after reading your post to Bulldogbob, you surely deserve it...

 

The math he employed is spot-on...You changed the premise-Do you perhaps WORK for the government? The politicians are experts at changing the premise...

 

SS benefits are an entitlement? You asked him if he would be willing to take out only as much as he put in...That's the most arrogant, off-center and totally off base question I've seen on this thread, and that's saying something! What about the interest and earnings on the money over a 40+ year working life? Don't you think he should be able to "take it out?"  And can you imagine how much the earnings on his contributions (HIS MONEY) over 40+ years would be?

No, I imagine you couldn't...

Nov 22, 2011 3:20PM
avatar
Ha! Hole and Wall Street in the same line. I was thinking something else.

Don't get the panties in a wad, hell yesterday they were crying because gold dropped a whole $46 dollars and screaming. Today isn't crap, it'll be back up before Thanksgiving mainly because its just crazy unstable. You'd have better odds fighting the house in a casino.

Nov 22, 2011 5:37PM
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Hey -- Weren't we in a recovery?

oh, that's right , that was 2 hours ago!

Nov 22, 2011 5:21PM
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Happy Thanksgiving, i don't know i'm feeling kind of sick to my stomach. Oh and Merry Christmas , i don't know about thay either . Might have to pass on the Christmas thing this year. Bad case of no funds to buy much. Hope you all have better holidays in the near future. The outlook on the horizon isn't looking to great. Maybe all of Congress will think things over during this Holiday and come back and straighten things out. Cough............ cough, almost choaked on that one. Well try to have a good Holiday !!!!!!!
avatar
We all know that the insolvency of the European Government is directly related to the insolvency of the European Banking System.  The IMF can pump-in capitalization to the EU Banking System in an effort to slow down the inevitable demise of the EU. 
ROFL,
    The IMF is funded by broke European economies. Just how are broke European economies going to bail out other broke European economies??? 

    This is like magic something from nothing. 
Nov 22, 2011 4:35PM
avatar
So why in God's name is Wall Street all bent out of shape because of the IMF?  Oh, that's right New York get's more upset about the European B/S then they do sometimes over the U.S.A. B/S!!!! Talk about a Piss Poor reason to have stocks go down. And to be honest with you, would you blame the IMF for not wanting to get involved with the Bad Debt Bums from  Spain, Greece and Italy?  No, I don't blame them one bit!  And one could say that is why I don't agree with banks lending money to Bad Debt Bums either!  It's the Bums that don't pay their bills that got us into this mess to begin with. Do you understand that Wall Street or are you that Butt Blind???????
Nov 22, 2011 3:26PM
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Like we've been saying, just sucker's rallies people...At 1415 hrs they called to accelerate the selling and down we go once again. Why? Because they can...As simple as that. Like we said earlier, only a miracle will save us today; crooks having the times of their lives...Sad.
Nov 22, 2011 7:58PM
avatar

Nuad ormrac Quote:

Hell I remember when I could get a movie ticket for $4.50 and that was just in the 1980s.  My parents (father deceased mother in her 70s) told tales of movie tickets that cost a quarter....

 

My Comment

In the 1980s was when I quit going to the movies. I waited until I could go rent one for a lot less than attending the local movie house. As for going to movies for a quarter, those were not tales. On Saturday mornings, my parents would give me a dollar and the neighbor kids would get together and catch the bus, go to the morning kiddy shows for a quarter, buy pop-corn for a dime, and come back home with change. You could go to a gas station and buy gas for a quarter, and have three find neighborhood teenagers come out and filler up, clean the windshield, check the oil, and air up the tires, and then you actually paid using CASH, and heck, because my parents knew the parents of those teenagers, they usually gave them a tip. Damn, I miss those days.  

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