Stocks fall on wavering eurozone sentiment

Borrowing costs for key European countries rise. Angela Merkel stresses Germany's objection to greater ECB intervention. The US sees better-than-expected data on housing, industrial production and consumer prices.

By TheStreet Staff Nov 16, 2011 8:31AM

TheStreetImage: Wall Street sign (© Corbis/SuperStock)By Chao Deng, TheStreet

 

Updated at 1:32 p.m. ET


Stocks came off their lows but remained mired in negative territory as the failure of Italian bonds to hold earlier gains underscored persistent worries around the debt crisis.

 

The Dow Jones Industrial Average ($INDU) was falling 19.6 points, or 0.1%, at 12,076. The S&P 500 ($INX) was losing 1.6 points, or 0.1%, at 1,256, and the Nasdaq ($COMPX) was shedding 3.4 points, or 0.1%, at 2,682.


“The S&P is meeting various levels of resistance, so the market has been stalling the last week and a half” said Ryan Detrick, technical strategist with Schaeffer’s Investment Research. Detrick explained that the index has been dancing around 1,260, a key technical support level. He also noted that the S&P 500 is trading just below its year-to-date breakeven level of 1,257, as well as below its 200-day moving average of 1,270. Analysts consider a break above the average as a bullish sign.


With the European Central Bank still refusing to act as a lender of last resort, contagion in Europe's bond market threatens to engulf the region's largest economies. According to reports, the European Central Bank stepped in Wednesday in an attempt to stop a sell-off in European sovereign debt. Yields on Italian 10-year bonds eased below 7% after topping the key threshold earlier. However, the bank's intervention is known only to provide short-term stability for the market.

 

Borrowing costs in France and Spain have also been rising, making investors nervous that the debt crisis is entering a new, more dire stage, and that France may lose its pristine triple A credit rating. A downgrade of France would further erode the market’s confidence in Europe’s emergency rescue fund.

 

Meanwhile, German Chancellor Angela Merkel reiterated on Wednesday that Germany will resist pressure for the central bank to take a bigger role in stemming the debt crisis. Also weighing down sentiment was a Bank of England report that cast a grim outlook on the country's prospects for economic growth. Bank of England Governor Mervyn King said Britain’s economy could remain flat until mid-2012 and that he did not know how Europe would resolve its debt crisis. Bank of Japan Governor Masaaki Shirakawa said that Europe’s woes are affecting emerging nations and Japan.

 

Signs that Italy is taking its debt problems more seriously did little to stem the bleeding. Italy's Mario Monti formed a new government on Wednesday, bringing the country closer to staving off a potential default. However, investors are hoping that Italy will show further political willpower than a shift in its leadership.

 

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London's FTSE lost 0.1%, and Germany's DAX fell 0.3%. Overnight, Asian stocks fell for a second day. Japan's Nikkei Average lost 0.92%, and Hong Kong's Hang Seng closed down 2%.


On Wednesday, oil prices climbed back above $100 a barrel for the first time since early June. The December crude oil contract was gaining $2.11 to $101.48 a barrel. In other commodities, gold for December delivery was down $12.50 to trade at $1769.70 an ounce on Monday

 

"Most of the talk today is about higher oil prices," said Detrick , adding that airline companies were facing pressure. United Continental (UAL), Delta Air Lines (DAL) and US Airways (LCC) were falling by 2.5%, 2.4% and 1.5%, respectively


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Better-than-expected economic data out of the U.S. were largely ignored. Industrial production rose 0.7% in October, higher than the 0.4% increase expected, according to a report from the Federal Reserve. September's figure was revised from a 0.2% gain to a 0.1% decline. Capacity utilization came in at 77.8%, slightly higher than forecast and up from 77.4% in the prior month.


Confidence among U.S. home builders rose in November, according to the National Association of Home Builders' housing market index, which rose to 20 in November. The reading, though still low, was the best since May of 2010 and surpassed the consensus forecast for the level to stick at 18.


The consumer price index edged down 0.1% in October, a welcome surprise given that economists expected the level to sit tight after increasing 0.3% in September. Excluding food and energy, inflation rose 0.1%, in line with expectations.

 

Signs of easing inflation may give the Federal Reserve more leeway to further stimulate the economy if needed. Market participants often meet the possibility with enthusiasm but as David Semmens, economist with Standard Chartered Bank, notes, "this is Fed friendly data but is going to do little to sway the market one way or the other right now given the focus on Europe."

 

In corporate news, Target (TGT) was gaining 1.1% after its third-quarter profit topped estimates. The discount retailer earned $555 or 82 cents per share, compared to the forecast 74 cents per share by analysts, as it expanded its food selection and offered a discount to cardholders.


Retailer Abercrombie & Fitch (ANF) reported third-quarter earnings of 57 cents a share, less than the average analyst estimate of 71 cents a share. Shares were plunging 13.9% to $47.91.


Dell (DELL) beat third-quarter earnings estimates, but revenue failed to meet analysts' expectations. The world's third-largest PC maker reported adjusted earnings of 54 cents a share on revenue of $15.4 billion. Analysts were expecting earnings of 47 cents on revenue of $15.7 billion.


Citigroup (C) is preparing to eliminate 900 jobs in its securities and banking division, or about 5% of the unit's worldwide staff, The Wall Street Journal reports, citing people familiar with the situation.


Apple (AAPL) named Art Levinson as chairman. He fulfills the role held by Steve Jobs before his death last month. Levinson, the chairman of Genentech, has been a co-lead of Apple's board since 2005 but will now serve as nonexecutive chairman. Apple also said Walt Disney (DIS) CEO Robert Iger will join its board.


American Airlines parent AMR (AMR) appeared to have failed to reach a contract deal with its pilots. The lack of a deal had raised the specter of bankruptcy, which has clouded the outlook for AMR shares throughout the year.


Industrial conglomerate Tyco International (TYC) reported a fiscal-fourth-quarter profit of 92 cents a share, beating the Wall Street consensus target of 86 cents a share.

 

Gold for December delivery was down $12.90 at $1,769.30 an ounce on Monday. The December crude oil contract was gaining $1.99 at $101.36 a barrel.

 

The dollar was strengthening against a basket of currencies, with the dollar index rising 0.139%. In the bond market, 10-year Treasuries were gaining 8/32, diluting the yield to 2.021%.

198Comments
Nov 16, 2011 9:06AM
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Happy Good morning to ya'll.

 

It is another great day to wake up in America, were the President call us week and lazy, not to forget he had to play Golf!?!

 

Well and the Oil is going over the $100 mark ....again just in time before Thanksgiving. Yet we could have a pipeline being build from Canada to Texas and our Gov chooses not to allow it and postponed it to after the 2012 election? 20K jobs +/_ could have been created, yet our President needs time to think it over...

 

What is wrong with this picture,??

 

Have a great day.

Nov 16, 2011 9:06AM
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lol. good news.......bad news......good news....bad news.....good news...oh..somewhat bad news hahaha...stock market is nothing but a BIG JOKE. the politicians here and abroad are doing whatever they can to save all there collective asses. if you think getting in new presidents..new cabinets..it will nto change what is going to happen. there isnt enough money to save europe from there own destruction. we keep printing money like no tomorrow. 14 trillion??? oh yeah and climbing every ....single.....day lol.. whatever
Nov 16, 2011 12:50PM
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It is a darn shame what oil speculators are doing to our economy with their market manipulation. Now, they are praying on the old and poor people in this country who have no choice but to heat their homes with oil. They are driving prices sky high with no basic fundamentals to support them. Enjoy it while you can speculators cause sooner or later Washington will pull their finger out of their arses and tighten the loopholes in oil speculation in your precious market. Remember people, the representatives that we voted in to look out for us are sitting by and letting the speculators manipulate prices. Come next election, vote them out on the streets where they belong. We need a revolution in this country and we need to start on Wall Street and than move on to Washington.
Nov 16, 2011 12:44PM
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roughly 2005 i heard the last of the easy oil was coming out of the ground.  the end of simply pumping from a pool.  now we're into the steam extractions and other methods.  that's why the canada shale is now even a topic.  so from pure supply and demand, oil goes up.  of course when the dollar goes down, oil goes up.  and if the dollar goes up, oil goes up.  it's one of those materials. 

 

i told all who are paying serious attention that Oil would go past $100.00 a barrel and now you have it. The train does not stop here, as within a month, unless there is a worldwide revolution, we will see Oil at over $150.00 a barrel and that will eventually destroy our economy and the only ones who will be able to buy their children Christmas gifts will be the OIL COMPANIES.

This is not funny and for those who think it is and profit from those of us who love our children and struggle just to make it through another day..GO TO HELL......Sorry everyone..I am just totally feed up cause I can't do absolutely nothing to control this evil madness taking hold of our world and the way we live.

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Futures extended losses slightly after a report on consumer prices. The Consumer price index edged down 0.1% in October, a welcome surprise given that economists expected the level to sit tight after increasing 0.3% in September. Excluding food and energy, inflation rose 0.1%, in line with expectations.
What planet are these cpi guys living on?? It is clearly not earth and these United States of America. Heck I was looking at Christmas lights at Walmart and they are selling a string of 100 lights for $4.98 when they use to sell it for $2.50. Everything is higher food,gas,clothing the inflation rate my wallet sees is more like 5 percent a year. 

It's like the talk show on the way into work this morning. They said that illegal Mexican immigration was lower now and most of the illegals were going back home to Mexico to find jobs. However they also said that another sign was that Mexico's birth rate was now lower than that of America instead of the normal 7 kids per woman it use to be back in 1990's about three times lower.

WAKE UP PEOPLE Mexico's birth rate never dropped the women are just coming over here and having their baby's here instead of having them over there. That is why our birth rate is up and their's is lower. 

These people in the government just can not think anymore folks. That is why China is now the leading super power in the world and the US is their servant.
Nov 16, 2011 8:54AM
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The European Central Bank was rumored by traders to have stepped in Wednesday in an attempt to stop a sell-off in European sovereign debt. Investors continue to fear that ECB intervention can only provide short term stability to the markets.

Gee... ya think?

More "drinking to cure alcoholism" failed thinking.....
Nov 16, 2011 11:01AM
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Excluding food and energy, inflation rose 0.1%, in line with expectations.
Huh... A quick tally shows that in our household, most of what we spend is on Food & Energy. I wonder what inflation is excluding everything except Food and Energy? Don't tell anyone

Nov 16, 2011 9:46AM
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Peter, )below)........I am afraid, that the President is merely campaigning, and he is NOT thinking about Americans, but rather thinking about getting re-elected. Going to save his decision until after the election.  His promise was for the middle class and the poor, however, everything he has done in office has benefitted the rich. Vote him out in 2012. Change would be better than this! 
Nov 16, 2011 1:00PM
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Are you serious!.......has any one out there beside us struggling everyday Joes figured out if oil goes up ...our economy gets worse.....unreal people just unreal......God help us all....because the government and big business wont....
Nov 16, 2011 1:31PM
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Just in time for Christmas. Oil tops $100/barrel. Soon the signs at the pumps will read.: Bend over - Fill up - Merry Christmas.  I'm sure the local retail stores will love this news.  Idiot oil speculators.

Nov 16, 2011 10:00AM
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Perhaps we should let what is happening in Europe be a lesson for the US. Socialism running rampant. Obama and his cronies are taking us to teh same place; too many people riding around in the wagon and not enough pulling it.
Nov 16, 2011 12:39PM
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I told all who are paying serious attention that Oil would go past $100.00 a barrel and now you have it. The train does not stop here, as within a month, unless there is a worldwide revolution, we will see Oil at over $150.00 a barrel and that will eventually destroy our economy and the only ones who will be able to buy their children Christmas gifts will be the OIL COMPANIES.

This is not funny and for those who think it is and profit from those of us who love our children and struggle just to make it through another day..GO TO HELL......Sorry everyone..I am just totally feed up cause I can't do absolutely nothing to control this evil madness taking hold of our world and the way we live.

Nov 16, 2011 11:46AM
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I need some explanation here.  I am not an economics guru or anything but with the stock market dropping, the dollar index rising, and no indication that oil is being consumed faster, then why is the price of oil rising out of control again?

 

This makes absolutely no sense other than 1 obvious reason......WALL STREET SPECULATION MUST BE STOPPED OR THE ECONOMY WILL TANK VERY QUICKLY AND DRIVE THE UNITED STATES INTO THE WORST DEPRESSION IT HAS EVER SEEN!!!

Nov 16, 2011 10:37AM
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Oil at a $ 135.00 a barrel by turkey day !!  SCREW THE PEOPLE  !!  HAPPY THANKSGIVING  !!   DIE WALL STREET  DIE  !!!!!!!!!
Nov 16, 2011 10:21AM
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Is it just me or is anyone else tired of the same old news about Europe's debt problems.  

Nov 16, 2011 10:46AM
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"Signs of easing inflation may give the Federal Reserve more leeway to further stimulate the economy if needed."

 

Has anyone gone to the grocery store lately or a dept store?  Prices are rising on virtually everything that we buy and this idiot says inflation is easing?  Another "expert" out of touch with reality.  Actually...I'm surprised the market is "soaring" and "surging" on this news because that's generally what happens when any positive info whether it's the truth or not is reported.

Nov 16, 2011 11:18AM
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Wait until the holidays as people will spend less having little to no disposable income or savings with rising cost of food. Yeah!!! for Aunt Visa and Uncle Mastercard. The retailers are all offing to stay open, open earlier on Thanksgiving day for a jump on Black Friday. What a marketing scam!!! How about closing for Thanksgiving and give you employees time to spend with their families. Most are minimum wage employees that are part time and will be duped out of additional holiday pay. What are we coming to as as society?
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It's going to be a Merry Merry Christmas for the oil companies folks.  $4 then $5 a gallon gas is just around the corner.

Oil hits $100, first time since July

November 16, 2011 9:00 AM ET

By CHRIS KAHN

NEW YORK (AP) - Oil prices have hit $100 per barrel for the first time in nearly four months.

The price of benchmark West Texas Intermediate crude rose as high as $100.30 in electronic trading on Wednesday. The price has rebounded since peaking at $113.93 at the end of April.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.



Nov 16, 2011 9:46AM
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Yes, good morning, people. Let's see what the news says. Wall street futures off on Europe's debt woes again.

 

Here I thought Groundhog Day was just a movie.....

Nov 16, 2011 1:30PM
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Good to see our elected nitwits in Washington are watching Oil rise.  This is usually the only time during the year where we get a little relief at the gas pumps & now even that looks like it will be taken away with $102 barrel Oil.  If there was justification for it then high prices might be acceptable but other than Speculator GREED there is no reasonable explanation.  Maybe the greedy jerks can add a shot of Oil to their eggnog since they like it so much!!!
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