Market DispatchesMarket Dispatches

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-quarte​r 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)










 


Tags: CharleyBlainechinaeconomyeuropefinancialserviceshousingjobsoil
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518Comments
V_L
Jun 21, 2012 3:55PM
avatar
Executive Order for what?

You guys hooked on pickle juice need to lay off it for a while. First off... ask yourself what your members of Congress have done since the last elections. Anything good. How about good for YOU? As for the President, what of the major crises in play today would he have had a hand in or an authority to wave his wand and fix? The two groups that do have such empowerment- Congress and the Supreme Court have yet to generate A) Cooperation B) Substantial Legislation that helps the nation.

It's really embarrassing to read those long meandering often laced with misspelled words and/or bad grammar diatribes slandering the President. Flat out-- what has CONGRESS done besides collect pay, make insider market trades and say NO?

T J (T.J. in lv)
Jun 21, 2012 3:55PM
avatar
"investors fretted..."  Charlie, investors don't fret, get nervous, or skittish, or worried.  We don't live in constant fear.  Our investments are long-term and sound.  Call them speculators, swing traders, professional day traders, flippers, gamblers, or what have you, but for the love of God please stop disparaging the rest of us by referring to these worrisome tards as "investors". Do it.  Do it now.  Tell your friends.  Thank you.    
welder717
Jun 21, 2012 3:52PM
avatar

The way this article is written the crude oil falling below $ 80.00 is a bad thing. Maybe if it keeps falling we will have more money to spend and the economy will improve along with the stock market.

An American Veteran
Jun 21, 2012 3:49PM
avatar
Wall Street and their dirty money are the problem with the economy, let hem fail, let them crash same as the banks. What we have in this country as well as every nation in the world is financial and economic terrorism fueld by the same people that we elected to represent us from the very top down, there is not one senator or congress creature that is not a millionaire, why? glad you asked, because their privy to insider trading, yes that illegal, go to jail law, but wait, their all above the law, but you and i would be put under the jail, just like fast and furious biggest debacle since watergate and Obama claims executive privlige, how far are we going to let these lap dogs to wall street and the banksters break the law and usurpt the constitution? No one is accounable or else it was Bush jrs fault, and he was as bad as they came. Everybody is above the law in D.C is there even an honest politician who will step up point fingers and let justice prevail, hell even their banker buddies are above the law. This needs to stop and it needs to start with we the people we need to take this country back its ours not theirs to rape, pillage, plunder and spend us into the stone age. Then have the audacity to hike up our taxes and put it on our backs for their mismanagement and corruption, what say you?
insaneinvestor
Jun 21, 2012 3:49PM
avatar
Dump Obama this November. Stocks will then go up and so will hiring.
insaneinvestor
Jun 21, 2012 3:46PM
avatar

How about Jim Cramer's Celgene that he keeps on ragging on us to buy. DOWN. 11.3%.

 

I'm sure he'll say, "My bad." Sell your good stock and buy my crappy one. The sad pathetic show.

 

Same goes for his BMY.

flying higher...............
Jun 21, 2012 3:41PM
avatar

Executive Order: NDAA SIGNED BY BARRACK OBAMA ON JAN 1, 2012

 

To prevent the U.S. government from behaving like a king, the drafters of the U.S. Constitution empowered an elected legislature to write every law, to declare every war, and to remove its executive from office. To further prevent the abuse of individuals' rights, those authors wrote into the Constitution, even prior to the Bill of Rights, the right to habeas corpus and the right never to be punished for treason unless convicted in an open court on the testimony of at least two witnesses to an overt act of war or assistance of an enemy.

President Barack Obama waited until New Year's Eve to take an action that I suspect he wanted his willfully deluded followers to have a good excuse not to notice. On that day, Obama issued an unconstitutional signing and rewriting a law as he signed it into law, a practice that candidate Obama had rightly condemmed. The law that Obama was signing was the most direct assault yet seen on the basic structure of self-governance and human rights that once made all the endless U.S. shouting of "We're number one!" significantly less ludicrous. The National Defense Authorization Act is not a leap from democracy to tyranny, but it is another major step on a steady and accelerating decade-long march toward a police-and-war state.

President Obama has claimed the power to imprison people without a trial since his earliest months in office. He spoke in front of the Constitution in the National Archives while gutting our founding document in 2009. President Obama has claimed the power to torture "if needed," issued an executive order claiming the power of imprisonment without trial, exercised that power on a massive scale at Bagram, and claimed and exercised the power to assassinate U.S. citizens. Obama routinely kills people with unmanned drones.

change for love
Jun 21, 2012 3:40PM
avatar
Can't we all just get along? Money is not important, only love. So give me all of your money and I will love you for it. Remember, if you have no money you can not loose money. So Obama must love all of us very much.
Prometheus
Jun 21, 2012 3:36PM
avatar

The 'Wallectomy' ...

 

It has been said that in the upcoming election, most every citizen will be voting with their wallet. That scenario could only be possible if everyone even 'had' a wallet with anything in it.

 

Peace to all

Panic Attack
Jun 21, 2012 3:35PM
avatar
I sure do hope this summer of recovery is better than the last two we had.
OutFlip
Jun 21, 2012 3:34PM
avatar

You just don't get it  (WE ARE TO BLAME NOT ONE PERSON OR PARTY) We just set by an let it happen an blamed the other guy!!!!!!!!!!!  Get out in NOVEMBER an vote an try to make things better .

  Set term limits an take away thier intitlements ,that only happens when they help not by selling us out to the highest bidders. Let them live on percentage not on full wage. Come on down to earth they are no better than we are. We hierd them WE can fire them. No pay if they do not do the job , find aother one who will. WE NEED A REAL CHANGE  TO BAD WE DON'T HAVE MUCH TO CHOOSE FROM.

  Neither PARTY has much to brag about. ONE SHIPS JOBS OUT THE OTHER CAN NOT HELP BRING THEM BACK!!!!!!!!!!!!!!!!​!!!!!!  Congress just will not work together , they would rather make the other look worse so we do'nt notice how they have screwed us .

jomama247
Jun 21, 2012 3:30PM
avatar
Crude oli dropped to its lowest price since "Sept. 30, 2012". Back to the future? or is Rod Serling lurking about?  
theduderific
Jun 21, 2012 3:28PM
avatar
private sector is doing just fine
Bryant003
Jun 21, 2012 3:28PM
avatar

Sensational journalism again! The DOW dropped 1.78%! That's 1.78% not 30%! This is not a "plunge"!

 

To all the socialists out there who want me to share my hard earned money... try to come and take it!

Panic Attack
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.

GRIM REAPER 90
Jun 21, 2012 3:25PM
avatar
EXISTING HOME SALES FALL, BUT THE MEDIAN PRICES OF THESE HOMES IS UP. ALSO THE SALES RATE IS UP ALMOST 10% FROM A YEAR AGO.ANOTHER BATCH OF USELESS ASSMOKE DOUBLE TALK FROM THE NATIONAL ASSOCIATION OF REALTORS, WHO IN DECEMBER OF 2011 IN AN MSNBC ARTICLE ADMITTED THAT THE HOUSING MARKET WAS IN WORSE SHAPE THAN THEY THEMSELVES REPORTED(ASSMOKE).WH​AT IMBECILE IN THEIR RIGHT MIND WOULD TRUST THIS GROUP?
jimasis
Jun 21, 2012 3:24PM
avatar
To bob n la who said,
"This daily column cracks me up. Are investors, large investors -able to move markets- really so fickle that from day to day they react to a sneaze in european markets? One day DOw up200, next down. what really happens over nght to make these mood swing changes. Aboslutely silly or is it just this author's take?"

Actually the answer is yes. When your trading millions of dollars worth of stocks a "sneeze" blows a lot of snot. And they are not relying on the slug slow news feeds that the everyday person sees. Also fund managers make the most money by trading, as they get paid a fee for trading, win, lose or draw.  Of course they need a reason to trade, but any excuse will do if a good reason doesn't exist. I don't trade the stock market because it is easily manipulated by the "big boys". I trade the Forex because it's really to big to manipulate. It moves by supply and demand. To give you an idea of this, the NYSE, the largest stock exchange in the world, trades a typical volume of 60 to 80 billion $ a day. Compare that to the Forex market which currently trades close to 4 TRILLION dollars a day. I use a very simple system and just follow the leader. I never try to "guess where the market is going next and try to get ahead of the wave as quite frankly I'm not that sophisticated of a trader and I've learned not to trust the Gurus crap.

Wayne07
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.

bluetiger
Jun 21, 2012 3:23PM
avatar
Screw the global  economy. Things were better until the fed got involved. gettimg back to the global crap let me just say that all of these crap would not have happened if wall street had not merged with the European markets.
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