Rising gold and oil, Portugal downgrade slow stocks
The Dow falls 13 after the best week in 2 years. Crude oil briefly tops $97 but falls back when Moody's cuts Portugal's debt rating. Gold tops $1,500. Factory orders aren't as strong as hoped.
By Charley Blaine Jul 5, 2011 1:28PM
Updated: 6:31 p.m. ETWall Street came back to work today, but a lot of last week's exuberance stayed at the beach.
Traders sold bank stocks, insurance stocks, housing stocks and chip stocks -- industry groups that were among last week's big rally, the best in two years.
They bought crude oil (-CL), gold (-GC) and silver (-SI) quite a bit. They also bought gold and silver stocks, oil-service stocks, oil stocks and computer-hardware stocks. Especially Netflix (NFLX), up 8.1% to $289.63, and Apple (AAPL), up 1.8% to $349.43.
There was a brief flight to the safety of Treasury securities after Moody's downgraded Portugal's debt to Ba2, which means it's now considered junk. The Dow Jones industrials ($INDU) briefly were down as many as 41 points but recovered much of that decline.
But the Dow finished down 13 points to 12,570, ending a five-day winning streak. The Standard & Poor's 500 Index ($INX) also saw a winning skein ended after five days, falling 2 points at 1,338. The Nasdaq Composite Index ($COMPX) was up 10 points to 2,826, its fifth gain in a row and eighth in the last 10 sessions.
Article continues below.Futures trading suggests stocks will open lower on Wednesday. While there are no big earnings reports coming, there are two important economic reports: Institute for Supply Management's non-manufacturing index and the monthly report on corporate layoffs from outplacement firm Challenger, Gray & Christmas.
The ISM Index is expected to decline slightly, reflecting the economy's slow growth. Challenger, Gray reported 37,135 jobs cuts in May, about the same as April.
It's not clear if President Obama's invitation for lawmakers to come to the White House to discuss a possible deal on the debt ceiling will affect markets.
A quiet day with lots of issues
While Portugal emerged as an issue, there was additional uncertainty today to give investors pause: the U.S. debt ceiling to worry about, Greece and maybe some new worries about the health of China's banking system. Factory orders for May weren't as strong as hoped.
The day was so quiet that the gap between the Dow's high and low was about 61 points, the smallest gap since Feb. 14 when the gap was just 40 points and the sixth smallest gap of the year.
Crude oil settled up $1.95 to $96.89 a barrel after briefly hitting $97.28. Gold jumped $30.10 to settle at $1,512.70 an ounce, and silver added $1.705 to $35.41 an ounce. Copper (-HG) was up 4.5 cents to $4.3475 a pound.
The oil gains and a modest gain in natural gas helped Chevron (CVX), Apache (APA) and Anadarko Petroleum (APC) move higher. The gains for gold boosted Freeport-McMoRan Copper & Gold (FCX) slightly to $53.62.
The dollar rose on the Portuguese news against the euro, and the 10-year Treasury yield fell to 3.136% from Friday's 3.197%.
| Energy prices -- New York close | ||||||||||||
| Tues. | Fri. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $96.89 | $94.94 | 1.54% | 6.03% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $2.9566 | $2.9245 | 0.35% | 16.23% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $4.3630 | $4.3110 | -0.25% | -0.95% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $2.9774 | $2.9726 | 0.28% | 21.37% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude* | $113.61 | $111.39 | 1.00% | 19.91% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.5620 | $3.5650 | 0.59% | 15.95% | ||||||||
| (per gallon; AAA) | ||||||||||||
| Monday close. Most markets were closed for the Fourth of July. | ||||||||||||
Netflix leads the S&P 500 and Nasdaq-100
Netflix (NFLX) was a big star today, climbing 8.1% to $289.63. The gain led both the S&P 500 and the Nasdaq-100 Index ($NDX.X), which tracks the largest Nasdaq stocks. The mail-order and online movie-rental service said it will offer streaming movies in Latin America and the Caribbean this year. The Nasdaq-100 was up 9.8 points to 2,371.
Apple was higher on reports it is starting to order production of its new iPhone 5, expected in the fall. Barron's noted that Pacific Crest analyst Andy Hargreaves sees sales for the iPhone and the iPad rising in the fiscal fourth quarter, which ends in September, and the first quarter of fiscal 2012.
Ameron International (AMN), which makes fiberglass-composite pipe for moving oil, chemicals and fluids, saw its shares jump 28.4% to $85.08 after it agreed to be acquired by National Oilwell Varco (NOV) for $85 a share, or $772 million. National Oilwell Varco was up 2.2% to $80.05.
Energy Transfer Equity (ETE) raised its bid to buy natural-gas company Southern Union (SUG) for about $5.1 billion in cash. Energy Transfer's new bid values Southern Union at $40 a share, higher than a previous proposal of $33 a share and above a competing offer from Williams (WMB) of $39 a share. Shares of Energy Transfer were up 0.7% to $44.99 while shares of Southern Union rose 4.2% to $42.07.
Meanwhile, Regions Financial (RF) and Wells Fargo (WFC) dropped 2.1% to $6.17 and 0.9% to $28.42, respectively, after a Citigroup analyst said he sees risks to 2012 earnings estimates for large banks.
Baidu (BIDU), China's biggest search engine, said today it was partnering with Microsoft (MSFT) to allow its users to see English-language search results generated by Bing, Microsoft's search engine. Microsoft shares were up slightly to $26.05. (Microsoft is the publisher of MSN Money.) Baidu shares were up 1.8% to $145.87.
Private-equity firm TPG Capital plans to buy Immucor (BLUD) for $1.97 billion, or $27 a share. Shares of the blood-test product maker jumped 30.2% to $26.99.
Shares of Pfizer (PFE) were up slightly to $20.78, despite new research suggesting that its stop-smoking drug Chantix increases the risk of heart attack.
Chevron, Disney lead the Dow
Ten of the 30 Dow stocks were higher, with Chevron the leader, followed by Walt Disney (DIS), up 0.6% to $39.97, and IBM (IBM), up 0.5% to $175.43. Hewlett-Packard (HPQ) , down 1.6% to $36.47, and JPMorgan Chase (JPM), down 1.3% to $41.03, were the Dow laggards.
Meanwhile, 44 Nasdaq-100 stocks were higher. Seven stocks in the index contributed nearlyh 12 points to the index by themselves: Apple, Google (GOOG), Amazon.com (AMZN), Netflix, Baidu, Starbucks (SBUX) and Priceline.com (PCLN).
KLA-Tencor (KLAC), Sears Holdings (SHLD), Linear Technology (LLTC) and Nvidia (NVDA) were the Nasdaq-100 laggards.
| Short hits from the markets -- New York close | ||||||||||||
| Tues. | Fri. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.010% | 0.010% | -50.00% | -91.67% | ||||||||
| 5-year Treasury note | 1.695% | 1.799% | -3.36% | -15.92% | ||||||||
| 10-year Treasury note | 3.136% | 3.197% | -0.70% | -5.11% | ||||||||
| 30-year Treasury bond | 4.390% | 4.402% | 0.18% | 0.64% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index* | 74.985 | 74.570 | 0.47% | -5.43% | ||||||||
| British pound | $1.6119 | $1.6098 | 0.58% | 3.29% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.6204 | £0.6212 | -0.58% | -3.18% | ||||||||
| Euro in dollars | $1.4478 | $1.4545 | -0.03% | 8.21% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.6907 | € 0.6875 | 0.03% | -7.59% | ||||||||
| U.S. $ in yen | 81.23 | 80.71 | 0.41% | -0.16% | ||||||||
| U.S. $ in Chinese | 6.49 | 6.46 | 0.44% | -1.89% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $1.040 | $1.042 | 0.22% | 3.63% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $0.962 | $0.960 | 1.86% | -3.49% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,512.70 | $1,482.60 | 0.66% | 6.42% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $4.3475 | $4.3025 | 1.52% | -2.24% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $35.410 | $33.7050 | 1.66% | 14.46% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $6.3550 | $6.1225 | 8.68% | -19.99% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $6.2550 | $6.0675 | -0.56% | 0.48% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $1.1552 | $1.1781 | -27.71% | -20.23% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $2.6960 | $2.6365 | 1.60% | 12.10% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $96.89 | $94.94 | 1.54% | 6.03% | ||||||||
| (per barrel) | ||||||||||||
| Monday close. Most markets were closed for the Fourth of July. | ||||||||||||
60Comments
Jul 5, 2011 4:47PM
Has anyone ever seen the movie "Groundhog Day"? You know, the one where the same thing keeps happening over and over again, and it seems NOTHING can be done to keep the character in the movie from doing the same thing over and over again. This is EXACTLY how the stock market works, with the small "caveat" of throwing the occasional "bone" to the really intelligent people, who finance the people who run WallStreet's retirement, with their endless repeating of losing their money, day in and day out. Common sense has taken a PERMANENT vacation in America it seems...
Jul 5, 2011 4:37PM
Jul 5, 2011 4:34PM
News Flash - Moody's downgrades America, Obam throws a party. Michelle is wearing her finest gown and speaks to the crowd " For the second time in my adult life, I am proud to be an American" On the menu are Kobe Steaks, truffles and the finest French Wines. Obam fiddles as Washington burns. Obama "revenge is a dish best served cold" (Star Track)
Jul 5, 2011 4:32PM
Jul 5, 2011 4:20PM
just enter your name- In the early 80"s, it was mentioned that to produce oil shale economically, oil price would have to be $40 a barrel. Exxon spent 1 billion on developing an oil shale project out west. The price of crude drastically dropped in the mid 80's, and the project was abandoned. I know of these things since I was a petroleum exploration geologist that lost my job in 1986. Many thousands of people in the industry lost their jobs and homes during this localized depression. Even Kroger's closed it store in Lafayette LA. I still miss the cajun cooking!
Jul 5, 2011 4:02PM
old man - there are no guarantees in life other than death and paying taxes for a few. Increase supply would lower prices, assuming the dollar retains value. Using our resources would create hundred of thousands new high paying jobs. More of our money spent on energy would stay in the US instead of the middle eastern terrorist nations. Obam's withdrawal of oil from the strategic reserve is a childish political stunt. The reserve was meant only for supply interruptions. It will cost US a few billion to replenish Obam's drawdown. The original oil cost probably under $25 a barrel and will cost close to $100 a barrel to replace. Now that must be the new math of Obamanomics.
Jul 5, 2011 3:57PM
Rising gold, oil keep stocks in check
NO; it's the greek debt along with the french and german banks along with the wall street
More worryingly, Western banks, including the giants of Wall Street, have built a tower of credit default swaps — essentially insurance — on the debts of those countries, and the cost of paying up in a default would be huge. While the French and German banks have the biggest direct exposure to Greek's debt, it is American banks and insurance companies that would have the largest obligations to cover payments to those holding theswaps. New warning over Greek debt crisis
the stupidity of SOCIALISM and it's continued growth in america is going to cause a another global economic CLUSTER CKF if not this fall then in 2012 when the bank's com-a-calling; the debt ceiling is the final nail if it's raised and BILLION'S not cut on the yearly deficit!!!!
Jul 5, 2011 3:42PM
If I was wealthy, I would buy all the prime easily accessible oil shale deposits in Utah. I would then go bankrupt since Obam and his EPA thugs would regulate me to death and never give a permit. This would be another chapter in my life. Something wonderful is so close, but yet so far away. This is another example of punishing the producers. Progressive ways of crushing the producers will eventually impact their treasured class, "The Taker.' Obam thinks social justice will elevate the Takers by crushing the producers. According to Chrissy Matthews, this is tinkle down economics.
Jul 5, 2011 3:37PM
All you need to do is find out how is buying the oil futures. When you sell them their is no disclosure so know one knows how bought them. Example is in todays market you put down 3 to get 10 so in dollars it would take 9 billion dollars to buy all the futures on the market. Think about it who in the world has 9 billion dollars. I'm sure you could name a few. now i don't think one guy has bought all the futures but i would like to know who is buying and selling . for all we know Exxon and Shell are buying their own oil and making tons of money. Are the terrorists buying it to bring us down. who knows but if their was full disclosure the price would drop
Jul 5, 2011 3:31PM
We are blessed to have ample natural resources. We are condemned by the Progressives and their allies "Greenie Weenies" to stop our use of these resources. They don't care if their fellow citizens are unemployed, face massive inflation,starve and the country is close to chaos. Once the Chinese repossess Alaska, they will take full advantage of all the resources we left for them. Then, a Greenie Weenie in Alaska protesting the Chinese raping of the land will become an endangered species.
Jul 5, 2011 3:27PM
Jul 5, 2011 3:13PM
Are you kidding me with the 6 thumbs up for "We have more than enough domestic oil to run this country for 50 more years". If we had to rely solely on what is under out territory or in our waters, we'd have 5 years of oil. FIVE not FIFTY. Honestly where do you people get your information? Fox News?
Jul 5, 2011 3:03PM
oil goes up last week because stocks did good, oil goes up this week because stocks went down, sounds fair to me if your the president or wall street freakin crook's every f-in one of them. we have oil everywhere the the means to extract it but that idiot we have in the white will not let them start any new drilling. impeach that azzhole. yes i said it. theirs other words for him also that i cannot use. the story that was flying around the fox news. thought it was true for just a split second. does anyone think it could as well be stocks went up because mobil's pipe sprung a leak and figure what the hell lets get paid for the cost now and then again later. double dipping kinda starting to sound like the government that runs this country, can i have a job????
Jul 5, 2011 2:45PM
We have more than enough domestic oil to run this country for 50 more years which would give us ample time to develope alternative sources of energy. The oil prices were going to go up just as soon as QE2 ended and the government welfare for Wal Street and the banks dried up. The stock market can't maintain the momentum without government stimulus so investors are turning back to commodities again since folks can't live without food or commute without gasoline. Yes , any commodity trader should have to take physical possession of the oil purchased.
QE2 helped 20% of the US population like folks in the banking and brokerage industry. The problem was the other 80% who actually make up the bulk of consumer spending and ultimately GDP were left out in the cold. The oil market can only go up so long and then things will come to a screeching halt like 2008. The average consumer will cut back even more to the point retailers will start feeling the effects on earnings and bottom line.
Jul 5, 2011 2:31PM
Politicians = Rising prices
Politicians have to print money to deliver goods and services to constituents than can't afford to buy them. These may be parents that can't afford children, home owners that can't afford homes or retirees that can afford to retire. Therefore, voters inflate assets by demanding disposable income to buy things and investors take advantage of the bubbles to increase their invested capital and returns. Masses, voters, may be stuck with debt but it's because they keep electing politicians that sell them the fairy tale that they can have something for nothing. Don't blame capitalism for the failings of socialism 
Jul 5, 2011 2:20PM
One reason for escalating commodity prices is our government is devaluing our currency by out of control deficit spending and printing $100 bills like it is toilet paper.. If one had bought the Aussie Dollar several years ago, one would be better off by some twenty five percent. Who's fault is it that the US Dollar is in decline? In the future, it will take more and more dollars to buy anything. It is time to dust off your wheelbarrow. Soon it will take a wheelbarrow of dollars to buy a loaf of bread.
Jul 5, 2011 2:14PM
The world is going to have to face the reality soon that in about 100 years we have blown through about 3/4 ths of the world's supply of oil and that it will take less than 15 years to blow through the remaining 1/4th of the world's supply of oil. Or another way to put it we blew through a trillion years of lubrication fluid as surface transportation in about 115 years.
In 1973 I knew a person who had worked on shale oil for Mobile and at the time he said they could make money if the price of oil was $5 a barrel. Now they say that they can make money on shale oil if the price was above $80 a barrel. Seems like shale oil is like fussion energy. An energy of the future and always will be.
Figure in two years the price of oil will be about $300 a barrel.
Jul 5, 2011 2:05PM
There needs to be some serious changes in oil trading. Make the speculators take physical delivery of all of the oil futures that they buy and force them to pay storage fees, then see how many million futures they buy ahead. This is just one way that they manipulate prices. This economy will be headed for another crash if oil prices keep going up. Washington needs to pull their heads out of their arses and do something to help out the working man. Everything revolves around oil in this country and Wall Street knows that they have us right where they want us.
Jul 5, 2011 1:58PM
Jul 5, 2011 1:46PM
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