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

Updated: 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.

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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)