Oil falls below $100; stocks take a dive

The Dow falls nearly 140 points as oil drops under $100 for the first time since mid-March and a weekly report shows jobless claims rising. Silver is off more than 25% this week. GM results disappoint.

By Charley Blaine May 5, 2011 12:58PM
Charley BlaineUpdated: 6:02 p.m. ET.

Stocks tumbled Thursday afternoon on a disappointing report on jobless claims and an ugly sell-off for commodities.

Crude oil (-CL) dropped below $100 a barrel for the first time since March 16. Gold (-GC) settled below $1,500 for the first time since April 20, and silver (-SI) plunged to its lowest close since March 22. Both were continuing to fall in electronic trading.

The commodity bust pushed the dollar higher for a third day in the last five and pushed U.S. interest rates lower. The bad news on jobless claims raises the chances that Friday's big report on payroll employment and unemployment, due at 8:30 a.m. ET, will disappoint.

The Dow Jones Industrials ($INDU) closed down 139 points, or 1.1%, to 12,584 after a midday rebound fell apart. The Standard & Poor's 500 Index ($INX) was down 12 points, or 0.9%, to 1,335, and the Nasdaq Composite Index ($COMPX) was down 14 points, or 0.7%, to 2,815. The Nasdaq-100 Index ($NDX.X), which tracks the largest Nasdaq stocks, was down 12 points, or 0.5% to 2,375.

The loss was the fourth straight decline for the S&P 500 and the Nasdaq. This is only the second time since 1960 that the S&P 500 opened May with four straight declines. The Dow's only gain this week was just 0.15 of a point on Tuesday.

Article continues below.

The market's volatility comes despite a reasonably strong first-quarter profit report from General Motors (GM). But GM shares sold off.

The selling also produced a flight to the dollar, which was up against the pound, euro and Canadian dollar. The U.S. Dollar Index rose to 74.38 from Wednesday's 73.21.

The dollar rose as many investors sought safety in the 10-year Treasury note. The yield on the note fell to 3.168% from Wednesday's 3.223% and 3.57% as last as April 11.

Commodity plunge takes stocks down, too

Silver's decline this week reached an unprecedented 25.4%. Silver for July delivery settled down 8% to $36.24 an ounce today and was off an additional $1.70 an ounce to $34.54 in electronic trading after New York trading closed. From Wednesday's settlement price, silver is off 12.3%.

The price plunge wasn't unexpected. Silver had jumped 57% between Dec. 31 and Friday and 28.3% in April alone.

Thursday's fall was largely in reaction to a fourth margin increase in a bit more than week, and there were reports of new margin increases Friday and Monday. iShares Silver Trust

Margins have increased 84% in less than two weeks. Rarely does anyone pay full price for a commodities contract. The only question is how much of the price one must put up to take a position.

Some of the selling was in response to reports that big investors in gold and silver, such as George Soros, have been reducing their positions. 

Gold, meanwhile, settled down $40.80 to $1,481.40 and was trading at $1,472 in electronic trading. That's a total loss of some 2.8%.

The selling in gold and silver also hit exchange-traded funds that buy silver.

The iShares Silver Trust (SLV) plunged 11.9% to $33.72. Based on the close, it's off 27.5% this week. The ETF rose 25 cents after hours to $33.96. Trading volume today was an astounding 294 million shares -- 30% higher than the volume in the SPDR S&P 500 (SPY) ETF, which tracks the entire S&P 500.

The SPDR Gold (GLD) ETF fell 2.9% to $143.47, a 5.8% decline on the week. Like the silver ETF, it was higher after hours at $143.67.

Crude settled down $9.44 to $99.80. It had dropped to as low as $98.25 around 12:30 p.m. ET. It was off an additional 28 cents to $99.52 in electronic trading.

If the oil sell-off holds or continues in the days ahead, motorists may get a small break at the gas pump. Gasoline was averaging $3.985 a gallon today, according to AAA's Daily Fuel Gauge Report. It takes a week or so before lower prices turn up at gas stations.

Energy stocks plunged on the oil sell-off. Chevron (CVX) was off 2.6% to $101.94; Exxon Mobil (XOM) dropped 3% to $82.26. Those declines subtracted more than 40 points from the Dow.

Eighteen of the 20 stocks in the Dow Jones Transportation Average ($DJT) were higher, led by Delta Air Lines (DAL), up 7% to $11.20. The index was up 53 points to 5,445.

Energy prices -- New York close
 
 Thur.  Wed.  Month chg.  YTD chg.
Crude oil (-CL)

$99.80  $109.24  -12.40%  9.21%
(per barrel)

 

 

 

 
Heating oil (-HO)

$2.8869  $3.1430  -11.87%  13.49%
(per gallon)

 

 

 

 
Natural gas (-NG)

$4.2610  $4.5770  -9.30%  -3.27%
(per mil. BTU)

 

 

 

 
Unleaded gasoline (-RB)

$3.0954

$4.5770

-10.66%

26.18%
(per gallon)

 

 

 

 
Brent crude 

$110.80  $121.19  -11.99%  16.94%
(per barrel)











Retail gasoline

$3.9850

$3.9820

1.94%

29.72%
(per gallon; AAA)











Only 3 Dow stocks with gains
Only three of the 30 Dow stocks were higher: Intel (INTC), Walt Disney (DIS) and Cisco Systems (CSCO).

The laggard was Alcoa (AA), down 2.6% to $17.01 after Tom Albanese, CEO of mining giant Rio Tinto (RIO), dismissed speculation his company was readying a takeover bid for Alcoa.

Meanwhile, 40 Nasdaq-100 stocks finished higher today, led by video-game maker Electronic Arts (ERTS), up 8.8% to $21.68 and Ross Stores (ROST), up 6.9% to $78.55.

Electronic Arts beat analysts’ estimates by 3 cents with adjusted earnings of 25 cents a share and easily topped expectations for revenue of $923.88 million with fourth-quarter sales of $995 million.

Ross Stores said same-store sales for April rose 10%, and the company boosted its first quarter earnings guidance to $1.47 to $1.48 a share, up from $1.32.

Decliners were ahead of gainers 1.6-to-1 on Nasdaq and 1.64-to-1 on the New York Stock Exchange.

Jobless claims disappoint; so does Trichet
The jobless claims numbers were a bit of a shock. Most economists had expected the weekly number to drop. For the week ended April 30, jobless claims ran at a seasonally adjusted 474,000, up from a revised 431,000 the week before. The seasonally adjusted rate has been above 400,000 for four straight weeks.

Jobs have been slow to recover from the Great Recession. Some 8 million jobs disappeared in the financial crisis, with perhaps a quarter of the job losses coming in construction.

The jobs picture for April may not be as bright as hoped. There had been hope that non-farm payrolls would rise perhaps 200,000, although estimates have been falling as furloughs have spread in the automotive industry because of parts shortages resulting from the Japanese earthquake. The unemployment rate is expected to hold at 8.9%.

In addition to the jobless claims, traders were disappointed with the European Central Bank, which had been expected to raise its base interest rate today. ECB President Jean-Claude Trichet said the bank would monitor price pressures carefully before raising rates. The next meeting comes next month. The Bank of England also held rates steady.

GM profit jumps, but investors wanted more
General Motors exceeded Wall Street's expectations with first-quarter adjusted earnings of 95 cents a share on sales of $36.2 billion. The profit was due to stronger vehicle sales, but asset sales also were a big part of the earnings. Analysts had projected a profit of 91 cents on sales of $35.6 billion. General Motors

The stock, however, was down 3.1% at $32.02. Some analysts were disappointed by the revenue growth in North America, which was impacted by the auto maker's move to offer big discounts in January and February, The Wall Street Journal noted. The company expects to lower incentives for the rest of the year. Rival Ford Motor (F) dropped 0.5% to $15.08.

JDS Uniphase (JDSU) jumped 6.9% to $21.38, after gaining as much as 11%. The maker of fiber-optic equipment forecast fourth-quarter revenue of as much as $475 million, more than the $469.1 million average analyst estimate.

Shares of Whole Foods Market (WFMI) were up 0.4% at $59.95 after the natural foods supermarket operator topped second-quarter earnings expectations late Wednesday.

Short hits from the markets -- New York close
 
 Thur.  Wed.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.010%

0.020%

-75.00%

-91.67%
5-year Treasury note 

1.891%

1.937%

-4.25%

-6.20%
10-year Treasury note

3.168%

3.223%

-3.88%

-4.15%
30-year Treasury bond

4.281%

4.329%

-2.84%

-1.86%
Currencies











U.S. Dollar Index

74.375

73.213

1.73%

-6.20%
British pound

$1.6383

$1.6504

-1.87%

4.98%
(in U.S. $)











U.S. $ in pounds

£0.610

£0.606

1.90%

-4.74%
Euro in dollars

$1.453

$1.484

-1.90%

8.62%
(in U.S. $)











U.S. $ in euros

€ 0.688

€ 0.674

1.94%

-7.93%
U.S. $ in yen 

80.150

80.620

-1.58%

-1.50%
U.S. $ in Chinese

6.489

6.489

-0.35%

-1.90%
yuan











Canada dollar

$1.033

$1.044

-2.09%

2.98%
(in U.S. $)











U.S. dollar 

$0.968

$0.958

2.05%

-2.96%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,481.40

$1,515.30

-4.82%

4.22%
(per troy ounce)

 

 





Copper (-HG)

$3.998

$4.134

-4.33%

-10.10%
(per pound)











Silver (-SI)

$36.240

$39.388

-25.43%

17.14%
(per troy ounce)











Wheat (-ZW)

$7.5400

$7.7200

-5.90%

-5.07%
(per bushel)











Corn (-ZC)

$7.0875

$7.2950

-6.00%

13.86%
(per bushel)











Cotton 

$1.4686  $1.5151  -26.65%  1.42%
(per pound)











Coffee 

$2.88  $2.95  -3.87%  0.1985447
(per pound)











Crude oil (-CL)

$99.80

$109.24

-12.40%

9.21%
(per barrel)











62Comments
May 5, 2011 3:27PM
avatar
Hmmm maybe the market is going to start making sense after all. Oil should be dipping below 100 (waaay below). Why would there be demand for fuel when half the population is unemployed and squatting in cardboard boxes under bridges? Think I'm joking? Just wait and see. And I don't think Ben and his bag-o-monopoly money is going to cut it anymore either.Party
May 5, 2011 2:08PM
avatar
Again people, continue being cautious, those are called sucker's rallies, they try to lure as many people as possible thinking we are rebounding and then the call comes and the selloff resumes. Another tactic these manipulators use....They are in complete control now with 2 hours left...Just be careful and observe these scumbags do their thing.
May 5, 2011 4:31PM
avatar

Higher oil prices aren't caused by just the greedy speculators and corrupt companies; there's an additional factor that most people seem to overlook. Oil is priced in dollars. Our 'wonderful' Fed has been printing dollars like there's no tomorrow. They're doing this so that the US can pay its debts...but it's also flooding the market with dollars. When our currency devalues, the price of oil is going to go up, no matter what the demand is. Our government is to blame for this. They've tried to devalue our currency to get us out of this recession, and this will NOT work - it's never worked for any country. Higher gas prices are just the beginning.  In short, We the People are getting royally screwed

May 5, 2011 4:08PM
avatar
If your product is not selling then why would you keep all the employees that you currently have.  The problem is that people don't have the excess cash to buy things that they might or might not need.  And who can we blame?  The oil companies are to blame.  These speculators don't realize that every time oil goes up the gas companies for some reason keep raising the price of gas. They have not even paid for the oil yet, received it or even converted it into gas, yet we can change the price.  Talk about a conspiracy! These guys might rate as the #2 worst enemy facing not only the U.S. but the world. But of course the government won't do anything because every increase in gas gives them more tax dollars.  And the more tax dollars they get means that they can spend our money on stuff that really isn't necessary. I would like to nominate the Oil/Gas companies as public enemy number two.  Does anyone else feel the same way????
May 5, 2011 4:07PM
avatar
You know what oil below $100 a barrel means for us? NOTHING.
May 5, 2011 4:25PM
avatar
big deal - oil is below 100 again.  what gets me mad is the day after bin laden was killed the prices at the pump were all raised by 10 cents per gallon - why - fear again that someone will fart in the middle east or some other dumb reason to screw the american citizens again and again
May 5, 2011 5:11PM
avatar
Big deal, the oil future speculators have backed off the buying frenzy, for now. All it will take is the slightest fear that some sort of event MAY spark  an oil flow disruption, and here we go again. They'll start buying and bidding against each other on the bet they will be able to sell at a profit down the road. Oil should not be a commodity traded on the futures market, by non-user speculators. They are crippling the economy.
avatar

Oil companies contract to drill and pump ........OUR OIL..................then we subsidize those oil companies with OUR DOLLARS.......................to help speculaters ......................market OUR OIL ..............in other countries...............meanwhile the Fed prints money to make OUR DOLLAR ..........worth less so that we pay more money to buy back OUR OWN OIL.................

 

American politicians are fond of telling us what is the act of humans as well as WHAT IT IS TO BE AMERICAN, ......................WELL, EVIDENTLY BEING AMERICAN IS BEING SO HUMANE THAT WE ARE ABSOLUTELY BRAINDEAD STUPID!

May 5, 2011 4:56PM
avatar
It takes a week or so for lower oil prices to hit the pumps but, it only took a few hours this past week for a BP by my house to raise their price by 18 cents and oil had gone down by $1.00 that day.  Bull S...! They're screwing us!
May 5, 2011 3:14PM
avatar
They just called to accelerate the selling at 1510 hrs....I think this will be a lot worse than just 120-140....Very little anyone can do right here when these crooks take over...The cheating and manipulating is out of control....Only the SEC can control this but...They are doing fine, thanks...Shhh don't wake them up.
May 5, 2011 5:07PM
avatar
Good I hope the speculators go broke, I also hope the government doesn't bail them out. People need to stand their ground and teach them a lesson. I have been boycotting gas by using as little as possible, walking and riding my bike whenever I can. We as a people need to stand together and keep the squeeze on the speculators and the oil companies.
May 5, 2011 3:39PM
avatar
Here we go again - oil up, stocks scared go down -  oil down, stocks scared go down.  Obama cuts cheese, stocks go ?.
May 5, 2011 5:46PM
avatar

What about making the sorry SOB's who go to play in Washington, D.C. pay for every drop of fuel they use driving around in their limo's? Not one of those pricks pay for anything! Taxpayers money has kept them above all us peons and living like royalty. Nothing they do is worth squat while they are in office! Waste and spend is the normal routine.

 

If you or I did the crap the speculators do we would be under the jail for insider trading. The stock traders do the same thing and keep costs high by taking advantage of the market on oil and stocks. Check the prices of soy beans, corn and other comodities. Plus the fuel we get now is crap because the reduction in fuel economy from the ethanol doesn't burn as well plus it makes water in the fuel.

 

Government attempting to make Americans buy new vehicles which gives them more tax money is the plan. I'll be damn if these sorry pricks will run everything I do and 99% of them are not paying the taxes they owe and have fixed the law where they are immune.

May 5, 2011 5:11PM
avatar
Now, just increase the margin requirements on oil contract speculation just like with silver and gold and the price of gas will come down to a more reasonable level.  Quit letting these guys speculate on oil without putting any skin in the game.   
May 5, 2011 3:58PM
avatar

Oil is down but gas is up, What's new? 

 

But of course the oil companies aren't price gouging!  They'd never do that! 

 

$3.90 per gallon this morning where I live, what about you? 

May 5, 2011 5:38PM
avatar
The sad fact is that the oil speculators and traders can so easily recreate this artificial unwarranted price outrage without any restrictions and full impunity due to the huge influence their lobbyists have on a cowardly congress.
May 5, 2011 4:41PM
avatar

Looks like the market is going to right itself after all. Many posts have declared oil should be below $100. I agree.

 

People are highly intelligent in America and will only take so much. From the posts that are listed here, there would appear a quiet storm of pissed off working Americans who are getting ready to flick the booger back on Wall Street and the oil barons who control it. Thumbs upDon't tell anyone

 

Someone asked, gas in Virginia is 3.78 a gallon for 87 octane (Hess). Drive less, blog more.

May 5, 2011 4:40PM
avatar
So oil prices drop, so why didnt gas prices go down as well??It shows the corrupt oil companies and traders and speculators still have the upper hand.
May 5, 2011 4:01PM
avatar
Well, the aberration continued today...Nothing, I mean, nothing justifies the market been down 100 point today or 150 or much less 200 but, it happened, especially after been down 83 yesterday...Manipulators were in heaven thus millions of people lost a bundle today, this week actually; its like playing a game without a referee...Plenty of complaints were filed with the SEC, even as we type this they are been submitted. The sad thing is that they will do no good, the SEC could fill up warehouses with the complaints they receive, they are too inept to do anything about it...Remember Madoff. These cheating scumbags have made more money this week than they made the last 2 months combined, and the week is not over yet...Unreal. Apparently cheating and stealing pays off on Wall Street.
May 5, 2011 6:07PM
avatar
Great; so I guess gas at the pump will be 50-cents a gallon cheaper tomorrow morning; right???  RIGHT!
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