Dow falls 251 as economic worries deepen

Stocks fall broadly, and crude oil sinks below $80 as a widely watched manufacturing report disappoints. Existing-home sales dip. Bed Bath & Beyond and Celegene shares slump. Big banks are downgraded by Moody's.

By Charley Blaine Jun 21, 2012 12:39PM
Charley BlaineUpdated: 7:34 p.m. ET

Stocks tumbled in the second-worst loss of the year today as investors fretted about slowing growth around the world as well as weaker-than-expected reports on manufacturing in the Philadelphia region and existing-home sales.

Jobless claims declined less than expected. Crude oil (-CL) in New York fell below $80 a barrel for the first time since October, in part because of a report showing weakening manufacturing in China. Brent crude fell below $90 for the first time since the end of 2010. Energy stocks were the biggest drag on the market.

The market was also hurt by a Goldman Sachs recommendation today that investors short the entire Standard & Poor's 50O Index ($INX), believing the index is headed to 1,285, a 3% decline from its current level. Analysts believe economic weakness that became apparent in May is continuing in June. And bank stocks were lower in expectation that Moody's Investors Service was going to downgrade 15 global investment banks this afternoon or Friday.

Meanwhile, Bed Bath & Beyond (BBBY) shares slumped by $12.50 to $61.17 after the company trimmed fiscal-second-quarter guidance. And shares of biotechnology company Celgene (CELG) dropped $7.72 to $59.45 after European regulators asked for more data on its drug Revlimid, used to treat patients with multiple myeloma, a cancer of blood plasma cells.

The Dow Jones industrials ($INDU) closed down 251 points to 12,574. The S&P 500 dropped 30 points to 1,326, and the Nasdaq Composite Index ($COMPX) fell 71 points to 2,859, its first decline after five straight gains. The losses for the three indexes were their worst since June 1, when the Dow fell 275 points in its biggest loss of the year.

Article continues below.
The Nasdaq-100 Index ($NDX) was off 66 points to 2,557. Bed Bath & Beyond and Celgene contributed 20 points to the loss by themselves. Apple (AAPL), the biggest influence on the index, was up off $8.07 to to $577.67, subtracting 7 points from the index. Microsoft (MSFT), the publisher of MSN Money, was off 80 cents to $30.14, taking 6 points off the index.

The sell-off came after the Federal Reserve cut its projections for economic growth over the next few years amid a slowdown in hiring and concerns about Europe and potential dislocations from an abrupt decline in federal spending next year. Futures trading suggests stocks will open higher on Friday.

Big investment bank ratings are cut
Adding to the market's stress was a decline in financial stocks. Moody's Investors Service downgraded 15 banks with large capital-markets businesses after today's close. The downgrades came after a review that began in February.

The companies affected were:

Citigroup
(C), Morgan Stanley (MS), JPMorgan Chase (JPM), HSBC (HBC), Bank of America (BAC), Goldman Sachs (GS), Credit Suisse (CS), UBS (UBS), Royal Bank of Canada (RY), Royal Bank of Scotland (RBS), Barclays (BCS), BNP Parisbas (BNPQY), Societe Generale (SCGLY), Credit Agricole (CRARY) and Deutsche Bank (DB). 

Shares of all the companies were lower in regular trading. The shares of the U.S. banks, however, were all higher after hours.

Morgan Stanley rose 44 cents, or 3.2%, to $14.40. Most analysts had expected its rating to be cut 3 notches. It was cut 2 notches to Baa1 from A2.

Energy prices -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Crude oil (-CL)

$78.20

$81.45

-9.63%

-20.87%
(per barrel)











Heating oil (-HO)

$2.5231

$2.5846

-6.66%

-13.42%
(per gallon)











Natural gas (-NG)

$2.5820

$2.5170

6.61%

-13.62%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.4520

$2.5073

-9.94%

-7.73%
(per gallon)











Brent crude 

$89.50

$92.69

-12.14%

-16.65%
(per barrel)











Retail gasoline

$3.4720

$3.4870

-4.09%

5.98%
(per gallon; AAA)














Thur.

Wed.

Month chg.

YTD chg.
Crude oil (-CL)

$78.20

$81.45

-9.63%

-20.87%
(per barrel)











Heating oil (-HO)

$2.5231

$2.5846

-6.66%

-13.42%
(per gallon)











Natural gas (-NG)

$2.5820

$2.5170

6.61%

-13.62%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.4520

$2.5073

-9.94%

-7.73%
(per gallon)











Brent crude 

$89.50

$92.69

-12.14%

-16.65%
(per barrel)











Retail gasoline

$3.4720

$3.4870

-4.09%

5.98%
(per gallon; AAA)












Jobless claims have hit a plateau; home sales dip
Jobless claims fell to a seasonally adjusted 387,000 in the week ending June 15 from 389,000 in the week of June 9. The bad news was that the June 9 figure was revised upward from an originally reported 386,000. Moreover, the weekly claims have climbed by about 25,000, or roughty 7%, from 362,000 at the end of March.

Existing-home sales fell 1.5% from April to a seasonally adjusted 4.55 million in May, the National Association of Realtors reported today. The sales rate, however, was up 9.6% from a year ago.  The median price of a home rose 7.9% from a year ago to $182,600, with prices highest in the Northeast at $250,700.

The decline was attributed to tightening supplies of lower-priced homes across the country. The trade organization pleaded for banks to expedite their foreclosure processes to boost the supply. It wasn't all that long ago that Realtors worried that foreclosures would flood local markets and hurt prices.

A bothersome Philly Fed report
The Philly Fed Index fell from a reading of -5.6 in May to -16.6 in June for current activity, its second monthly decline in a row. The index is the popular term for the closely watched Business Outlook Survey of the Federal Reserve Bank of Philadelphia.

New orders, shipments and average work hours were all negative this month, suggesting overall declines in business. For the second straight month, more companies reported more price declines for their products than price indications.

The survey’s indicators of future activity remained positive and improved slightly, suggesting that the current weakness in activity may be short-lived.

Oil prices tumble; gold drops
Crude oil in New York settled down $3.25 to $78.20 a barrel, its lowest price since since Oct. 4, 2011, when it closed at $75.67 a barrel. Crude is down 24% this quarter alone and 20.9% for the year. 

Brent crude settled at $89.23, down $3.46. It was Brent's lowest close since Dec. 1, 2010. It's off 27.4% this quarter and 16.9% for the year.

The national average retail price of gasoline was $3.472 a gallon, down from Wednesday's $3.487, according to AAA's Daily Fuel Gauge Report. It's off 11.8% since peaking in early April but up 6% for the year.

Chevron (CVX) and Exxon Mobil (XOM) were off $3.61 to $100.02 and $2.86 to $82.11, respectively.

Gold (-GC) settled down $50.30, or 3.1%, to $1,565.50 an ounce. Silver (-SI) dropped to $26.839 an ounce, down $1.55, or 5.5%. Copper (-HG) was off 8.95 cents, or 2.6%, to $3.298 a pound.

Interest rates were lower, with the 10-year Treasury yield falling to 1.608% from 1.642% on Monday.

Only two of the 30 Dow stocks closed higher: Merck (MRK), up 24 cents to $39.45, and Verizon Communications (VZ), up 3 cents to $43.33. Pfizer (PFE) suffered a small loss: 7 cents to $22.60, respectively. The laggards were Alcoa (AA), down 37 cents to $8.55, and Intel (INTC), down 93 cents to $26.71.

Five stocks -- IBM (IBM), Chevron, Exxon, Caterpillar (CAT) and Boeing (BA) -- contributed nearly 119 points to the Dow's loss by themselves.

Only 12 S&P 500 stocks were higher on the day, led by media company Gannett (GCI) and Conagra Foods (CAG), which reported better-than-expected quarterly earnings. The two were up 42 cents to $13.47 and 66 cents to $25.26, respectively.

Bed Bath & Beyond and Celgene were the S&P-500 laggards. They were also the laggards among Nasdaq-100 stocks.

All of the Nasdaq-100 stocks were lower.

We should note that Facebook (FB) was one of the rare winners on the day, rising 24 cents to $31.84. The shares were higher after hours as Nomura Securities analyst Brian Nowak initiated coverage of the stock with a "buy" rating.

Short hits from the markets -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0700%

0.090%

0.00%

600.00%
5-year Treasury note 

0.725%

0.744%

8.05%

-12.65%
10-year Treasury note

1.618%

1.642%

2.34%

-13.52%
30-year Treasury bond

2.688%

2.724%

0.60%

-6.96%
Currencies











U.S. Dollar Index

82.488

81.734

-0.77%

2.44%
British pound

1.5598

1.5716

1.20%

0.39%
(in U.S. $)

 








U.S. $ in pounds

£0.641

£0.636

-1.19%

-0.39%
Euro in dollars

$1.25

$1.27

1.51%

-3.16%
(in U.S. $)

 








U.S. $ in euros

€ 0.797

€ 0.787

-1.48%

3.27%
U.S. $ in yen 

80.39

79.47

2.33%

4.26%
U.S. $ in Chinese

6.39

6.36

0.08%

0.96%
yuan











Canada dollar

$0.972

$0.982

0.40%

-0.89%
(in U.S. $)

 








U.S. dollar 

$1.029

$1.018

-0.40%

0.90%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,565.50

$1,615.80

0.08%

-0.08%
(per troy ounce)

 








Copper (-HG)

$3.298

$3.388

-2.01%

-4.02%
(per pound)

 








Silver (-SI)

$26.8390

$28.3890

-3.31%

-3.85%
(per troy ounce)

 








Wheat (-ZW)

$6.6175

$6.6400

2.80%

1.38%
(per bushel)

 








Corn (-ZC)

$5.5000

$5.665

-0.95%

-14.93%
(per bushel)

 








Cotton 

$0.7817

0.8317

9.25%

-14.74%
(per pound)

 








Coffee

$1.5880

1.524

-2.55%

-30.85%
(per pound)

 








Crude oil (-CL)

$78.20

$81.45

-9.63%

-20.87%
(per barrel)










 


470Comments
Jun 21, 2012 1:52PM
avatar
D D    Remember this.  Government is not the answer, its the problem
Jun 21, 2012 1:29PM
avatar
Oil below $80 a barrel. Here in Michigan we're still paying $3.58 per gallon. Next news will be oil companies earn record profits. Could someone please pass the K Y.
Jun 21, 2012 3:25PM
avatar

You want jobs? Implement the following and millions of jobs will be created very quickly:

 

1) Repeal (eventually replace) Affordable Care Act

2) Jump start the keystone pipeline

3) Lower all taxes (corporate, personal, etc).

4) Get rid of all Public (state worker, etc) Labor Unions

5) Get out of Boeing's way and let them manf. in SC

6) Get the EPA, DOE and Education back in their proper place

7) Get rid of redundant federal programs that waste enormous amounts of money

8) Allow Health Insurers to compete across state lines

 

There is a ton more that can be done, but, even the short-list above will generate a lot of activity.

Jun 21, 2012 2:19PM
avatar
Under Obama's RULE..........American investors have become the banks.........with NO  PAID  INTEREST!! Think about it!!!!!!!! NO MORE OBAMA in 2012!
Jun 21, 2012 1:41PM
avatar
Obama is about the destruction of America!
Jun 21, 2012 2:13PM
avatar

OK, I'm quite surprised at all the bickering and name callling in these posts. I think regardless of party affiliation, we can ALL agree that:

 

A) the author of this article is a hack, as are most of MSN's writers;

B) We, the People, are getting screwed by the government; and

C) it is our duty as citizens of this great country to vote this November.

 

At this point, I see our ENTIRE government as part of the problem, not a part of any solution. As long as we continue to be divided, we will continue to have a dysfunctional government that pretty much screws over its people.

Jun 21, 2012 1:46PM
avatar

@ flying higher....

 

The buying power of the dollar that you use to buy that gallon of gas has dropped by 50% due to the wonderful monetary easing policies of the FED and our great government.  That is the largest problem with pumping trillions of dollars into the economy to keep it ficticiously propped up.

Jun 21, 2012 1:26PM
avatar

WHOO HOO!!! The price of oil dropped to $79 so I should be paying around $2.00/gal tonight at the pump right???? Cause I remember when Obomba took office, gas was at $4.00/gal and the price of oil then was at $145

 

Explain the lodgic behind that my president....oh wait, this administration does not use lodgic in their thinking or decision making. I'm holding Mr. Pres accountable for the destruction of America - now, why won't anyone else???

Jun 21, 2012 2:33PM
avatar
This is not a funk....it is a Democrat Malaise....

If Oblama is re-elected prepare for a depression that will make the last one look like a New Years Eve party!
Jun 21, 2012 2:39PM
avatar
The US economy will never recover as long as Marxists control Washington.  Their job is to destroy the economy, not help it.  Let more parasites suckle off the Government teat, and let more illegals take jobs from legal US citizens.  It's only the working class, tax-paying Joe who will get screwed. Get with the program, people!
avatar
Ok, I warned you three weeks ago about this exact scenerio!  The last time gold and stocks dropped and the dollar rose in value was 2008.  Sound familiar?  Two stimuluses later we are back at the same place.   Welcome to "Black Monday" part II!  Spain still is not able to tell us how much of an infusion of cash it needs.  There are few safe havens for a crash of this magnitude.  So keep putting your money and 401k's into the stock market and watch it evaporate just like 2008.  Wall Street loves the fact that you are keeping their commissions from evaporating.  Now lets look at the misguided stimuluses that washington used.  If they had given th money to the taxpayers, the money would have gone to buy products (vehicles, furniture, clothing, ect. ect.) and to paying off debt such as credit cards and mortgages.  So, in the end you would have created jobs and the money would have still ended up with the banks.  Instead, we gave it to Wall Street, banks, Insurance companies, and Automobile companies.  The banks held on to the money and still don't want to lend it!  (credit crunch)   So tell me what a great job President Obama and Timothy Gietner are doing!   They tell you that they are going to raise taxes on the rich and big business.  However, who attends their fund raisers?  The rich and big business!  So if you were really going to raise taxes on them, do you think they would pay to go to a fund raiser to help you raise their taxes?  I think not!!   Get a clue America.....your government does not listen to you and the President is elected by the rich and big business! 
Jun 21, 2012 3:23PM
avatar

Good job both rep & dem's.  It's time to vote the whole damn bunch of

you out of office.  The good ole boys and girls club has got to go.

Jun 21, 2012 2:47PM
avatar
Go ahead and vote for Obama in November.....AND WATCH YOUR LIFE GO IN THE SH . . . . ER!!!!!!!! not me!!!!!!!!!!!!!
Jun 21, 2012 2:49PM
avatar
Hey Jeff, we were PROMISED transparency in everything BO did.  We have yet to see it just once.
Jun 21, 2012 2:02PM
avatar

Isn't it now COMPLETELY CLEAR that this administration has no clue about managing the financial side of government? 

Is Romney any better?  I hope we at least give it a try.  I've seen enough of communism OBAMA style.

Jun 21, 2012 2:26PM
avatar
This clown and his pathetic administration have to go! Absolutely Worthless! If you voted for Obama because you wanted change, you need to vote against him for the same reason! We need change, we can not continue on this path. 
Jun 21, 2012 2:56PM
avatar
So crude oil is down 20.5% for the year but gas is only down 6%?  HMMMMMM........
Jun 21, 2012 2:47PM
avatar
Obama got the credit last week for the "best week of the year" yet, no blame for him today.  Look at that market dropping like a rock.  Surely, it is Bush's fault!!  Blame Bush, blame Bush, just keep blaming Bush..
Jun 21, 2012 2:19PM
avatar
What happened to the idiots who swore we would be paying $6-$7 for gas by the summer? what happened to the Idiots who swore that we would be going to war with Iran before the summer? I HATE IDIOTS WHO WRITE NEWS ARTICLES AS IF THEY KNOW THE FUTURE !
Jun 21, 2012 3:57PM
avatar
The thing that SUCKS THE MOST about all this. NO matter WHO'S in office, we're in this mess for a LONG time, people say get rid of Obama in November yet they forget about the other 2 branches of government,  we still have idiots in CONGRESS AND THE SENATE and don't forget the supreme court.  Im sorry but for those of you who say Romney is the answer, I don't think so. I think he's the same as the rest of the politicians, only with a different suit and tie. There's a reason why he lost his last presidential bid. I'm not a Democrat or Republican. I just wish people would get serious and vote out ALL POLITICIANS, if you want to prove a point, that would be the only short term way. Voting independent might help to.
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