Dow falls 101 on profit-taking, economic worries

An early rally falls apart after the head of the Philadelphia Federal Reserve Bank says the Fed's stimulus plan won't work. Money manager BlackRock says stocks have peaked for 2012. Home prices and consumer confidence rise. Google hits a new high.

By Charley Blaine Sep 25, 2012 1:12PM
Charley BlaineUpdated: 8:31 p.m. ET

Stocks suffered their worst declines in at least a month today despite reports showing a stronger-than-expected index of home prices in 20 markets and the highest consumer confidence levels since February.

The slump was started by worries that the Federal Reserve's stimulus won't work and fears the market rally since June is running out of gas. At the same time, broadcasts of violent protests in Spain against potential new austerity measures also dismayed investors.

Charles Plosser, president of the Philadelphia Federal Reserve Bank, said he does not believe the Fed's latest stimulus campaign would do anything for economic growth. Plosser had opposed the Fed's decision to buy up to $40 billion in mortgage bonds. At the same time, BlackRock, one of the top asset managers, said stocks have peaked for the year. The Standard & Poor's 500 Index ($INX) will end the year at 1,450, BlackRock said -- just below current levels, but the firm sees the S&P reaching 1,25 by mid-2013.

Casualties of the pullback were housing stocks, which had rallied in the morning thanks to the home-price numbers. Construction equipment maker Caterpillar (CAT) weighed on the market after warning its 2015 profits would be lower than expected. 

The Dow Jones industrials ($INDU) fell 101 points to 13,458, their third straight decline and biggest one-day loss since Aug. 30. The S&P 500 was off 15 points to 1,442, and the Nasdaq Composite Index ($COMPX) was down 43 points to 3,118, its second loss in a row. The Nasdaq-100 Index ($NDX) lost 39 points to 2,805.

Article continues below.
The S&P 500's close was its lowest since Sept. 12, and its loss was its biggest since June 25. The Nasdaq's loss, its third in four days, also was its largest since June 25.

The Dow had risen as many as 61 points to 13,620 before selling set in. The blue chips have now topped 13,600 five times since Sept. 14 -- and been unable to hold that level into the close. The last time the Dow finished above 13,600 was Dec. 10, 2007.

The S&P 500 hit a 2012 closing high of 1,465 on Sept. 14. The index index hit an intraday high of 1,475 -- and fell back. It hasn't come close to 1,475 since then. The index is up 14.6% this year and is up 12.8% since bottoming in early June after a big sell-off in May.

Wednesday will feature a Commerce Department report on new-home sales. Futures trading suggests a slightly higher open for stocks.

Energy prices -- New York close (Updated)



Tues.

Mon.

Month chg.

YTD chg.
Crude oil (-CL)

$91.37

$91.93

-5.29%

-7.55%
(per barrel)











Heating oil (-HO)

$3.1069

$3.0961

-2.30%

6.61%
(per gallon)











Natural gas (-NG)

$2.9240

$2.8370

4.47%

-2.17%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.8224

$2.7877

-5.06%

6.21%
(per gallon)











Brent crude 

$110.45

$109.81

-3.60%

2.86%
(per barrel)











Retail gasoline

$3.8100

$3.8080

-0.50%

16.30%
(per gallon; AAA)












A Fed official's skepticism and worries about a peaking market
The day's early gains were wiped out when the Philadelphia Fed's Plosser said he doubted the Fed's plan will work.

"We are unlikely to see much benefit to growth or to employment from further asset purchases," Plosser said in the text of a speech prepared for delivery today. "Conveying the idea that such action will have a substantive impact on labor markets and the speed of the recovery risks the Fed’s credibility."

Plosser also told Fox News that the Fed would have to raise rates well before 2015 because he expects the economy to be much stronger. The Fed recently said it expected rates to be exceptionally low until mid-2015.

Also weighing on the market was BlackRock's projections that 2012's gains were already achieved. Reuters reported that BlackRock's estimate of a 1,450 finish for the S&P was actually an increase from the firm's earlier forecast that the index would end at 1,350 this year hit 1,400 next year.

Earlier, the firm projected the S&P would finish the year at 1,350 and rise to 1,400 by mid-2013.

By one measure -- relative strength -- the Dow and the S&P 500 have been looking overbought since about Sept. 14. A 14-day relative strength index for each was well above 70 for much of that times. Readings above 70 are an overbought signal. Readings below 30 are oversold signals. At today's close, RSI values for the Dow, S&P 500 and Nasdaq were at 73.5, 67.7 and 59.2, respectively.
Caterpillar weighs on Dow; Google jumps
Caterpillar closed down $3.86 to $87.01 and was the biggest loser among the 30 Dow stocks and the 15th-worst performer among S&P 500 stocks. The company said late Monday that it sees tepid economic growth over the next few years. Rivals Joy Global (JOY), Terex (TEX) and Manitowoc (MTW) were also lower.

Apple, the biggest influence on the Nasdaq-100, was down $17.25 to $673.54, its biggest one-day loss since July 25, when it reported a rare earnings miss. The stock had set a record close of $702.10 on Wednesday before its iPhone 5 went on sale.

Google (GOOG), meanwhile, hit a new intraday high of $764.89 but fell back to $749.16, down 22 cents. Its market capitalization of $245 billion is now within about $10 billion of Microsoft's (MSFT), which was $256.8 billion. Microsoft, down 39 cents to $30.39, is the publisher of MSN Money.

Only five of the 30 Dow stocks were higher, led by Home Depot (HD), up 33 cents to $59.72. The stock moved up because of the S&P/Case-Shiller report. Next were Johnson & Johnson (JNJ) and UnitedHealth Group (UNH), which only joined the Dow this week.

Crude oil, gold lose early gains as dollar comes back
Crude oil (-CL) in New York and gold (-GC) were initially higher -- but then fell back as worries built about the global economy. Crude settled at $91.37, down 56 cents from Monday, after trading as high as $93.20.

Brent crude was up 47 cents to $110.28 a barrel but had been as high as $111.47.

Gold for December delivery hit $1,777.90 an ounce before pulling back to $1,766.90. That was still up $2.30.

The dollar had fallen in the morning against the euro and other currencies but has bounced up against the euro.

The 10-year Treasury yield was 1.682%, down from Monday's 1.718%.

Home prices may give the economy a boost
The market was initially cheered by the S&P/Case-Shiller Home Price Index, which showed prices in 20 markets increased 1.6% in July over June on an unadjusted basis.

A seasonally adjusted measure showed only a 0.2% gain. Either way, the gain was the sixth in a row. Many economists believe the price gains reflect lower inventories of foreclosed homes on markets and intensifying bidding by investors for foreclosed homes that can be rented out.

Meanwhile, The Conference Board said data showed confidence among American consumers rose in September to a seven-month high, which may help support the largest part of the economy.

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



Tues.

Mon.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.1200%

0.100%

33.33%

1100.00%
5-year Treasury note 

0.649%

0.659%

8.89%

-21.81%
10-year Treasury note

1.682%

1.718%

7.68%

-10.10%
30-year Treasury bond

3.032%

3.032%

12.97%

4.95%
Currencies











U.S. Dollar Index

79.608

79.577

-1.98%

-1.14%
British pound

1.6192

1.6228

1.91%

4.21%
(in U.S. $)

 








U.S. $ in pounds

£0.618

£0.616

-1.87%

-4.04%
Euro in dollars

$1.29

$1.29

2.47%

-0.39%
(in U.S. $)

 








U.S. $ in euros

€ 0.775

€ 0.773

-2.41%

0.39%
U.S. $ in yen 

77.94

77.85

-0.70%

1.09%
U.S. $ in Chinese

6.33

6.31

-0.58%

0.02%
yuan











Canada dollar

$1.020

$1.022

0.57%

3.97%
(in U.S. $)

 








U.S. dollar 

$0.981

$0.978

-0.57%

-3.83%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,766.40

$1,764.60

4.67%

12.74%
(per troy ounce)

 








Copper (-HG)

$3.759

$3.732

8.72%

9.39%
(per pound)

 








Silver (-SI)

$33.9480

$33.9840

7.97%

21.61%
(per troy ounce)

 








Wheat (-ZW)

$8.8650

$8.9200

-0.34%

35.81%
(per bushel)

 








Corn (-ZC)

$7.4375

$7.448

-7.00%

15.04%
(per bushel)

 








Cotton 

$0.7233

0.725

-6.38%

-21.11%
(per pound)

 








Coffee

$1.7365

1.723

5.40%

-24.38%
(per pound)

 








Crude oil (-CL)

$91.37

$91.93

-5.29%

-7.55%
(per barrel)










 

533Comments
Sep 25, 2012 2:10PM
avatar

A quick poll...

Thumbs up in favor of Romney...

Thumbs down in favor of Obama...

Sep 25, 2012 2:56PM
avatar

Another poll

 

Would the American people survive with a very limited government?

 

Thumbs up for yes, thumbs down for no.

Sep 25, 2012 4:01PM
avatar

"head of the Philadelphia Federal Reserve Bank says the Fed's stimulus plan won't work."

 

Finally somebody is telling the truth.

Sep 25, 2012 1:31PM
avatar
All of a suddeen stocks are lower on "growth worries".  Why weren't there any growth worries this morning????
Sep 25, 2012 1:38PM
Sep 25, 2012 2:09PM
avatar
The payroll tax cuts have injected more money into the economy than will Bernanke's latest desperate money printing effort. Yet, unemployment remains high and economic activity remains low. So, it's rational to conclude that Bernanke's latest attempts to "stimulate" the economy will indeed fail. 
Sep 25, 2012 4:06PM
avatar

So .... you started a business and hired a guy as CEO that has no experience but seems like a nice guy. Four years later, your business is bancrupt because your CEO has spent money like a drunken sailor and couldn't figure out how to budget the expenses. You've had to lay off your employees because you have no more money and everyone who is a vendor  or is important to your business now hates you.

Would you re-hire him?? Of course you wouldn't. Not unless you were dumber than your incredible dumb CEO!!! Tell me ... just how dumb ARE YOU?

Sep 25, 2012 1:39PM
avatar
At least someone at the Fed is honest.  The rise in home prices is meaningless unless you sell and if you do, where do you go?  And most home owners are already loaned out or are unwilling to go back into debt.    And all of the money prinitng since 2000 still has not gotten the S and P 500 back to its October 1, 2007 or August 1, 2000 highs.  Until we are allowed to exploit our energy reseources and become energy self-sufficient, we will continue in our secular stagnation (no new or implemented advances) and not generate improvements (like the combinaiton of telecommunications and the internet) that will add true value to the economy.
Sep 25, 2012 2:13PM
avatar
Does no one else wonder how this election could possibly be close?  obama is such an abject failure across the board.  Who is it that votes for him?  Truly discouraging. 
Sep 25, 2012 1:33PM
avatar
We have an imposter in the Whitehouse running a crooked economy.
Sep 25, 2012 3:26PM
avatar
pissed off american  posted       

thumbs up ROMNEY =   86 votes
thumbs down OBAMA =21 votes


Sep 25, 2012 4:29PM
avatar

Do you know that the Federal deficit is over $16 trillion. Obama has run up that debt more than any other Pres in history. And ... if you take the personal debt like credit card debt, college debt, etc .... our debt in U.S. would be over $100,000,000,000,000!!!! THE U.S. IS BANCRUPT. No ... really, it is!

 

Obama can forget the bailouts ... there is no more money! So, if a bank, a company, or a group of individuals needs money ... you're f*cked!! There is no money. (Thanks Barry) The only thing the Gov't can do is to raise interest rates since they are the lowest that they've been in 60 years. And just like with Jimmy Carter ... as we raise the interest rates .. radical inflation will be right behind it. It's already started! Your costs are higher than they were a few years ago ... and your revenues are going down!! I am amazed that people don't see the ledge we are falling off and are so stupid to not understand that Obama is to blame??

Sep 25, 2012 2:52PM
avatar
Well no shyt it won't work!! We ALL know that!! Never has worked never will. CANNOT SPEND YOUR WAY OUT OF DEBT WITH FAKE TOILET PAPER MONEY!!!!!
Sep 25, 2012 2:22PM
avatar
New York Schools have been giving out morning after (abortion) pills to kids without parental consent. They won't give your kid an Ibuprofen for a head ache but will kill their baby if you ask nice.


Sep 25, 2012 2:54PM
avatar

Poll,

 

Would the private sector survive with a very limited government?

Thumbs up for yes, thumbs down for no.

Sep 25, 2012 2:25PM
avatar
MSNBC and CNN are reporting the Obama took a dump this morning and it smelled like fresh baked apple pie. They then said that Romney's poop smelled like poop and that a man with sticky poo should not be President.
Sep 25, 2012 1:34PM
avatar
ROME --

If Plosser is an imbecile, then Bernanke and his supporters are plague infected rats in the crack house called the Federal Reserve.
Sep 25, 2012 4:33PM
avatar
REAL Racism.
I see the usual cretins throwing the R word around like it's candy.

You want REAL racism ?

Listen to our Worst Lady , Moochelle,  at the Black Caucus
(BTW, isn't the entire premise of a "black caucus"  , black news or Ebony,  RACISM at the highest order ?
Why yes it is.
LOOK up the meaning of racism and then tell me it isn't so ?
I digress
Our Worst Ladies most memorable quotes at the "black caucus"
Talking of the White house - " It was built in part,  by slaves"
This is a play on the YOU didn't build it rant, stupidity.
WHEN did any first lady from Mrs. Lincoln on, EVER reference slavery and why NOW, if NOT PANDERING TO THE BASE ?

What will "we:" do about Obese "African American" Children" - Who gives a sheet about fat , white kids, right Moochelle  ?
What will "we" do about illiteracy In urban areas ? No dumb white kids, either !
What will "we" blah, blah , blah

My question is WHO IS WE ?
Exactly, WHO is she speaking too.?
It's not whitey , is it ?
Why no, it's a separate race that our Worst Lady and Dear Leader  pander too, all at the expense of the rest of the country who are not "African" American.
Were just Americans and we don't count I guess , Moochelle ?
These cretins talk about Romney , he doesn't relate to the average guy, he's pandering to the rich , blah , blah
It's ALL GOOD however , when the Worst Lady wants to exclude whitey from her desires and needs for the country.
Let's just exclude all the honkies - No problem
Surprise , it's a problem with me and millions like me.
They will find out in Nov
There isn't another first lady who ever say the sheet that comes out of this racist , bimbo , America hating , affirmative action using , WORST LADY.
She's a loser




Sep 25, 2012 2:23PM
avatar
Dreams of My Father....?   What a joke. He only met the man once in his life and he was a full blown commie. 

Are those dreams or nightmares? 
Sep 25, 2012 2:35PM
avatar
Letterman, The View....what is next? 

Tosh.O?
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