Dow off 54 after midday rebound fades

Updated: 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.

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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-quarte​r 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)