Dow drops 107 on global slowing worries

The Dow holds at 13,000, but the S&P 500 drops below 1,400. Will Fed Chairman Bernanke signal new stimulus plans? Retailers see strong back-to-school sales in August. Sears is leaving the S&P 500. Crude oil and gold slip.

By Charley Blaine Aug 30, 2012 12:51PM
Charley BlaineUpdated: 8:21 p.m. ET

Stocks sold off today as worries about global economic growth trumped strong reports of August sales by U.S. retailers. The losses accelerated into the close by fears that Federal Reserve Chairman Ben Bernanke won't signal any big stimulus moves in a Friday speech in Jackson Hole, Wyo.

The Dow Jones Industrial Average ($INDU) fell 107 points, barely finishing above 13,000. The blue chips are now down slightly for August with a day of trading to go. The Standard & Poor's 500 Index ($INX) finished below 1,400 for the first time since Aug. 6.

The unease was set off by U.S. initial jobless claims, which were unchanged at a seasonally adjusted 374,000. German unemployment rolls grew by 9,000 to 2.9 million, its fifth straight gain, and Japanese retail sales disappointed.

The news was offset by generally strong August sales reported by U.S. retail chains as the back-to-school shopping season took off. Macy's (M), Nordstrom (JWN), Ross Stores (ROST) and TJ Maxx parent TJX Stores (TJX) reported sales gains of 8% or more.

The Dow closed at 13,001. The index had fallen to as low as 12,979. It was the Dow's first loss of 100 points or more since Aug. 23. The S&P 500 was off 11 points to 1,399, just above its low on the day at 1,397. The Nasdaq Composite Index ($COMPX) dropped 32 points to 3,049, its lowest close since Aug. 15.

Article continues below.
The Nasdaq-100 Index ($NDX) was off 30 points to 2,754. Apple (AAPL), the largest influence on the index, was off $9.60 to $663.87.

With one day to go in August, the Dow is down 0.06%, but the S&P 500 is up 1.5% and the Nasdaq has gained 3.7%.

All 10 sectors of the S&P 500 were lower today. But defensive stocks -- consumer staples and health care -- were the best performers, relatively speaking. Materials, energy and technology stocks were the laggards. Railroads and logistics companies also were weak.

Metals, energy and technology stocks were the market's laggards. Freeport-McMoRan Copper & Gold (FCX) fell 89 cents to $34.69. Cliff's Natural Resources (CLF), a big iron-ore producer, fell $1.09 to $35.75. JDSU Uniphase (JDSU) dropped 68 cents to $11.07, and Netflix (NFLX) slid $2.96 to $60.48.

Amazon.com (AMZN) reached an all-time high of $250, even though it closed lower on the day. Also reaching an all-time high: Costco Wholesale (COST), which hit $99.06 before finishing at $98.59, up $1.48 on the day.

After hours, teen retailer Zumiez (ZUMZ) shares fell $4.47, or 13.9%, to $27.75 after earnings missed Street estimates on higher costs and guidance looked shaky. Revenue in the fiscal second quarter was up 20.4% to $135.1 million, but costs were up 27%.

Futures trading suggests stocks will open modestly lower. But Bernanke's speech starts 30 minutes after the open.

Crude falls with economic concerns
Crude oil (-CL) in New York settled down 87 cents to $94.62 a barrel. Brent crude, however, was up 18 cents to $112.72 at 3 p.m. ET. The national average price of gasoline was up 2.2 cents to $3.826 a gallon, according to AAA's Daily Fuel Gauge Report.

Gold (-GC) settled down $5.90 to $1,657.10 an ounce. The dollar rose against major currencies.

Interest rates were lower, with the 10-year Treasury yield falling to 1.62% from Wednesday's 1.654% as some investors looked to the relative safety of U.S. securities.

Energy prices -- New York close (updated)



Thur.

Wed.

Month chg.

YTD chg.
Crude oil (-CL)

$94.62

$95.49

7.45%

-4.26%
(per barrel)











Heating oil (-HO)

$3.1333

$3.1224

10.02%

7.52%
(per gallon)











Natural gas (-NG)

$2.7480

$2.6850

-14.37%

-8.06%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.9080

$2.9168

4.82%

9.43%
(per gallon)











Brent crude 

$112.65

$112.54

7.35%

4.91%
(per barrel)











Retail gasoline

$3.8260

$3.8040

9.31%

16.79%
(per gallon; AAA)












Sears will leave the S&P 500
Sears Holdings (SHLD) was down $4.55 to $52.90 after Standard & Poor's announced it was removing the retailer from the S&P 500 after Tuesday's close.

The reason is that less than half the company's outstanding shares are owned by the public, S&P said.

S&P is replacing Sears with Dutch chemical-maker LyondellBasell Industries (LYB). LyondellBasell was up $1.78 to $48.67.

Before Bernanke: Signs of softening economies
Traders were still waiting for Bernanke's Friday speech in Jackson Hole in hopes of understanding when and how the Fed might do a new economic stimulus package. The speech is scheduled to begin at 10 a.m. ET.

The Fed boss, however, may disappoint Wall Street, choosing only to say the Fed will act if needed. Jobless claims data suggest the labor picture may be stagnant, but stagnant isn't remotely close to deteriorating.

At the same time, U.S. consumer purchases grew 0.4% after being little changed in June, Commerce Department figures showed. Economists had expected a 0.5% gain.

Meanwhile, European stocks closed lower as German unemployment worsened. As important, Spanish Prime Minister Mariano Rajoy said the nation will delay deciding whether to seek a sovereign bailout following a meeting with French President Francois Hollande. Spain's IBEX-35 Index ($ES:IB) lost 1.5%, and Germany's DAX Index ($DE:DAX) slid 1.6%.

Japanese retail sales dropped 0.8% in July from a year earlier, the first decline in eight months. South Korean manufacturers’ confidence stayed near the lowest level since 2009.

Amazon says it has no Kindle Fires to sell
The sell-off hurt Amazon.com, which had cheerfully said this morning that it has sold out all the current model of its Kindle Fire tablet device. The company is expected to announce a new model next week that will arrive in time for the holiday shopping season. Shares were down 90 cents to $246.22.

Amazon didn't  say how many Fires it has sold, but says it captured 22% of U.S. tablet sales over nine months. That would make it the second-most-popular tablet, after Apple's iPad. Tom Mainelli at research firm IDC said that figure matches his estimate of 6.7 million Fires sold, all in the U.S.

Amazon shares are up 5.5% this month and 42% this year.

Barclay's names a new CEO
British banking giant Barclays (BCS) tapped longtime executive Antony Jenkins to become its new chief, ending a nearly two-month leadership vacuum at the giant British bank following the sudden resignation of former chief Robert Diamond amid a scandal over interest-rate rigging. Barclay's shares in New York were down 20 cents to $11.55.

Carlyle has agreed to buy the performance-coatings unit of DuPont (DD) for $4.9 billion in cash, in a deal that marks the private-equity firm's third multibillion-dollar acquisition this summer. DuPont was off 36 cents to $49.58.

Citigroup
(C) agreed to pay $590 million over claims that it deceived investors by hiding the extent of its dealings in toxic subprime debt. Citigroup fell 26 cents to $29.65.

Solar-panel maker First Solar (FSLR) fell $4.53 to $19.67 on news it has halted deliveries for the $1.8 billion Agua Caliente Arizona solar plant due to construction being ahead of schedule. Agua Caliente, a joint venture between NRG Energy (NRG) and Berkshire Hathaway's (BRK.B) MidAmerican Energy, is already 85% built, even though the project isn't scheduled for completion until the end of 2013. The halt stoked fears First Solar's recent growth was padded by aggressive deliveries.

It's a day to be defensive
Only two of the 30 Dow stocks were higher: Merck (MRK) and Procter & Gamble (PG). They were followed by Johnson & Johnson (JNJ) and McDonald's (MCD). Caterpillar (CAT), Intel (INTC) and Cisco Systems (CSCO) were the laggards.

Only 63 S&P 500 shares showed gains, led by Gamestop (GME), Gap (GPS) and Marathon Petroleum (MPC). The laggards were solar-panel maker First Solar (FSLR), Sears Holdings and JDS Uniphase.

Meanwhile, nine Nasdaq-100 stocks were higher, led by Costco Wholesale (COST) and Electronic Arts (EA). Sears and Netflix were the laggards.

Short hits from the markets -- New York close (updated)



Thur.

Wed.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0900%

0.100%

-10.00%

800.00%
5-year Treasury note 

0.658%

0.683%

9.85%

-20.72%
10-year Treasury note

1.620%

1.654%

8.58%

-13.42%
30-year Treasury bond

2.738%

2.768%

6.25%

-5.23%
Currencies











U.S. Dollar Index

81.713

81.564

-1.21%

1.48%
British pound

1.5795

1.5835

0.73%

1.66%
(in U.S. $)

 








U.S. $ in pounds

£0.633

£0.632

-0.72%

-1.63%
Euro in dollars

$1.25

$1.25

1.76%

-3.39%
(in U.S. $)

 








U.S. $ in euros

€ 0.799

€ 0.798

-1.73%

3.51%
U.S. $ in yen 

78.80

78.70

0.87%

2.21%
U.S. $ in Chinese

6.37

6.37

0.21%

0.72%
yuan











Canada dollar

$1.008

$1.011

1.14%

2.79%
(in U.S. $)

 








U.S. dollar 

$0.992

$0.990

-1.05%

-2.72%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,657.10

$1,663.00

2.89%

5.76%
(per troy ounce)

 








Copper (-HG)

$3.4465

$3.448

0.85%

0.31%
(per pound)

 








Silver (-SI)

$30.3670

$30.8370

8.87%

8.87%
(per troy ounce)

 








Wheat (-ZW)

$9.030

$9.0575

1.66%

38.34%
(per bushel)

 








Corn (-ZC)

$8.085

$8.135

0.40%

25.06%
(per bushel)

 








Cotton 

$0.7694

0.7665

7.85%

-16.08%
(per pound)

 








Coffee

$1.6340

1.6665

-6.31%

-28.85%
(per pound)

 








Crude oil (-CL)

$94.62

$95.49

7.45%

-4.26%
(per barrel)










 

308Comments
avatar

Pretty much the US is still in a depression

 

take out the $1.8 trillion deficit spending the Government does and the Federal Reserve dropping the interest rates on T-bills to less than 1 percent from 3 percent saving 2 percent of 16 trillion or $320 billion which would have pushed deficit spending up to $2.1 trillion

 

so $2.1 trillion of GDP is coming from government deficit spending which equals about 15 percent of GDP so real GDP growth has been minus 12 percent

 

which is right in line with the contraction we are seeing in the private sector.

 

Compound everything by backing out the $4 trillion in the GDP which is the money all of us that still have homes get for renting our homes and living somewhere else for free and the picture is worse than the great depression.

 

Real GDP is probably below $10 trillion a year so the deficit spending is 21 percent of GDP

 

this means our economy is contracting at a rate of 20 percent a year.

 

We only have about two more years left folks.

 

The real math is about ready to run out and then all the money in the world that Bernnake can print will not save us.

Aug 30, 2012 3:55PM
avatar

>>>If the Obamadon't care health plan is so great, why is congress exempt?<<<

 

5PMFriday wrote: I would remind you that your health care matters not to those in congress, as they have a "spare no cost" plan, while you're subject to the whims of your insurance carrier, if you (the rhetorical you, not neccessarily you personally)  have insurance.  What matters to your congressman is how much money a health care lobby will contribute, in two years, to his re-election.  Is Obama care being demonized because its bad, or because it's bad for a particular interest group? 

 

Not sure where you went with this post...I'd like an answer from the members of Congress on this. When President Obama was asked this exact question in a 2011 television interview, he just smiled, shook his head and said nothing. The interviewer, to his everlasting shame, went on to another subject. Again, I would sure like an answer.

Aug 30, 2012 3:35PM
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there has never been a recovery no matter how they try to put a spin on it the recession only turned into the GREAT DEPRESSION of our day for 35% of Americans
Aug 30, 2012 2:38PM
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The question for Obama is whether he and his butt buddy in at the FED can keep the market falsely inflated until election day. After that, he would welcome a collapse as it would make even more people feel they have no where to turn...except to the almighty Gov't. 
avatar
So, tomorrow, our leaders will reiterate the fact that the people might get some scraps in the future, but for the foreseeable future the bankers will be served first, thus the people and the true economy be damned!
Aug 30, 2012 1:43PM
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The drop is more than justified. The market is in a bubble going from 6,500 to over 13,000 in a shrinking economy. If the Fed. stopped manipulating the real correction could take place. In stead we will remain in the doldrums till election time.
Aug 30, 2012 1:22PM
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After inheriting quiet a bit of money, I have decided to wait until next year to invest in anything. If Ieven do then.
Aug 30, 2012 2:49PM
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I think Ryan will be the bulldog for the GOP. He  will debate the issues and not be  evasive on what he stands for. This is what I would like. Scrap obamacare and have a state run health care that each state can control cost., with some federal guidelines.  Establish a legal definition of marriage as a legal commitment between a man and woman. Have legal definitions for a civil union for gays to protect their rights, Stop the use of abortions as birth control,  They should be used for rape and incest, and health issues with the mother. Don't give illegal's a free pass, when others wait in line for years to get their citizenship. It's not fair to the people who enter the country legally. Get the debt under control and shrink the goverment.
Aug 30, 2012 5:47PM
avatar
Its all a load of BS. theirs a bunch of bottom feeders all waiting for the latest Govt give away so they can save us all . Gimme a braek. we bailed out GM and for all our efforts they just invested a billion in Russia

what a bunch of  f - ing  as-holes
Aug 30, 2012 2:56PM
avatar
If the Obamadon't care health plan is so great, why is congress exempt? 
Aug 30, 2012 2:40PM
avatar
Theresa, the President is a politician first and always. All the politicians care about is getting re-elected. They are all the same....on both sides. They could care less about your life as long as they have your vote. 
Aug 30, 2012 3:28PM
avatar

There are two major things wrong with our current system of governemnt.

 

1.  It has become far to big and complicated to operate efficently and effectively.

All that is talked about is this system and that system needs to be reformed, but

nothing ever gets done.   Our democracy is crumbling under the very weight of the system

that was suppose to operate it.  The politcal system.  It is the system that most needs

to be reformed.

 

2.   Politicans.  See one above. They are the heavies that are causing our system to crumble.

Aug 30, 2012 4:47PM
avatar

The headline reads STOCKS FALL ON GLOBAL ECONOMIC WORRIES.  It should read STIMULUS PUMPED STOCKS ARE FALLING BECAUSE BENDOVER WON'T GIVE ANYMORE FREE MONEY.

 

The Big Banks and Wall Street are going through financial withdrawal right now because old Bendover Bernanke knows that a round of stimulus right now would be futile.  The Federal Reserve mandate was only suppose to be one task, protect the money supply by controlling inflation.  Then they added two other mandates of their own, throw money into the economy to increase employment and pump the stock market up to give the appearance of prosperity.  The fed has failed on all three mandates, we have commodity inflation because of the increased money supply and diluted dollar, unemployment is still at record highs and will only the banks and Wall Street are prospering at the expense of the middle class.  Its time to rein in the Central Bank and do away with the whole self serving bunch.  

Aug 30, 2012 4:43PM
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With the god awful debt hanging over this country a stagnate economy is a good one,but a worse economy is on the horizon if there is no change in government.

Aug 30, 2012 5:26PM
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I love this line - "retailers see strong back to school sales in August".WHAT ???? I think the technical reply to this is -   well, DUHHH !
Aug 30, 2012 4:35PM
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My friends,we have 2 HUGE reasons to be happy today 1)All this bad news today will be spun into the good news tomorrow.You know how that works,POOF everything is great again ! 2)COLLEGE FOOTBALL STARTS TONIGHT ! ! ! ! ! ! !
Aug 30, 2012 9:35PM
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It's much easier for Ryan and Romney to scare the crap out of people than put their ideas out there, that is, if they have any solutions.

I really wish I knew what Romney stands for and what his plans are. Just saying that he's going to "repeal all the laws" and regulations, and lower the taxes for the wealthy doesn't equate to job growth.
Aug 30, 2012 4:17PM
avatar
Like we warned early, be careful today; manipulators took control right after the bell and had a ball all day....Killed every rally attempted and at 1530 hrs called for the last wave of selling and we went back down triple digits....Why? What were the horrible news today? Retail sales? Not at all....They do not need news, for the umpteenth time people, news do not move markets, people do so, after having a few not so good weeks these scumbags are leaving today with a big grin on their faces and better believe they will try to repeat tomorrow, regardless what the Fed says, they will try to spin it in a way that in their minds it will justify another selloff...We all know its pure and simply market manipulation...The SEC knows it too but, they are worthless so do not expect a thing from them...Oh well, we will find out soon enough.
Aug 30, 2012 5:10PM
avatar
What I find hilarious is they didn't even elect the best lib. they had in 2008,Clinton Clearly won all the debates with solid answers,did Obama even answer a question? If I remember right every answer was hope and change and getting along.
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