Stocks tumble as eurozone fears flare up

A Spanish bond auction draws tepid interest. A gauge of the US service sector shows weakness. American companies add more jobs than forecast. JPMorgan agrees to pay a $20 million fine for actions related to Lehman's collapse.

By TheStreet Staff Apr 4, 2012 7:43AM

TheStreetImage: Wall Street sign (© Corbis/SuperStock)By Andrea Tse

 

Updated at 12:32 p.m. ET

 

Stocks were sinking Wednesday after a better-than-expected jobs report in the U.S. failed to counter fears sparked by a weak Spanish bond auction and tepid data on the American service sector.

 

The Dow Jones Industrial Average ($INDU) was down by 146 points, or 1.1%, at 13,054. The S&P 500 ($INX) was down by 16 points, or 1.1%, at 1,397. The Nasdaq ($COMPX) was losing 52 points, or 1.7%, at 3,061.

 

All but four of the Dow’s 30 components were falling, the biggest laggards being Bank of America (BAC), JPMorgan Chase (JPM) and Alcoa (AA). Only AT&T (T), Procter & Gamble (PG), Merck (MRK) and Verizon (VZ) were trading higher.


Spain's disappointing debt auction Wednesday reminded investors that the country could be next to seek a bailout. The auction for three-, four- and eight-year bonds raised 2.6 billion euros, the lower end of the targeted range of 2.5 billion euros to 3.5 billion euros. Investors showed that they were reluctant to hold Spanish debt without a higher risk premium.

 

Shortly after the sale, Spain's 10-year benchmark bond yield rose to 5.6% from 5.45% Tuesday. London's FTSE was losing 2.3%, and Germany's DAX was falling 2.8%.

 

Post continues below.

 

Adding to investors' worries, the Institute for Supply Management said its non-manufacturing index, a measure of the service industry, fell to 56 in March from 57.3 in February. Economists surveyed by Bloomberg had prediced the gauge to sink to 56.8. Still, readings of more than 50 indicate the industry is growing.

 

The services report and bond auction overshadowed positive data on employment. Automatic Data Processing (ADP) said U.S. companies added 209,000 jobs in March, more than the 200,000 economists had predicted, according to Dow Jones Newswires. The number of jobs added in February was revised to 230,000 from 215,000. The ADP report is a precursor to Friday's government employment report. 
 

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U.S. stocks fell Tuesday, possibly signaling the end of the year's rally, after the Federal Reserve suggested in minutes from its latest policy meeting that more quantitative easing may be unlikely. The strategy aims to boost the economy through bond transactions. The central bank's current bond-buying program, known as Operation Twist, which involves selling bonds nearing expiration and using the proceeds to buy longer-term ones, finishes in June.

 

In corporate news, General Electric's (GE) credit rating was downgraded a notch by Moody's (MDY) because the agency said it sees risks associated with the funding model of GE's lending unit, General Electric Capital Corp. GE was cut to Aa3 from Aa2. GE Capital's rating was cut by two notches to A1 from Aa2.

JPMorgan Chase (JPM) was forced to pay a $20 million settlement to the Commodity Futures Trading Commission Wednesday, as the CFTC accused the bank of mishandling Lehman Brothers' customer segregated funds leading up to the firm's 2008 bankruptcy. The CFTC suit was the first federal enforcement case to stem from Lehman's downfall.

 

Seed producer Monsanto (MON) said its fiscal second-quarter profit increased 19% to $1.21 billion, or $2.24 a share, helped by an early planting season in the U.S. That beat analysts' estimates for $2.11. The company boosted its annual profit forecast to $3.49 to $3.54 a share from $3.39 to $3.44.

 

SanDisk (SNDK), the flash memory company, lowered revenue and gross margin expectations for its fiscal first quarter, citing "weaker than expected pricing and demand." SanDisk said it now sees revenue of roughly $1.2 billion compared to a prior projection of $1.3 billion to $1.35 billion. Analysts are forecasting revenue of $1.34 billion in the quarter, which ends this month.

 

Yahoo (YHOO) shares were rising after the Internet portal said it was cutting about 2,000 jobs, or 14% of its workforce, to save an estimated $375 million a year, as the company’s new chief executive officer Scott Thompson strives to shore up the company’s profits and sales.

 

After hitting a new all-time high Tuesday, shares of IBM (IBM) were slipping after the tech giant was downgraded by Bank of America Merrill Lynch to neutral from buy, citing limited valuation and near-term upside. The bank, however, raised IBM's price target to $215 from $205.

 

May oil futures were giving up $2.16 to $101.85 a barrel, while June gold futures were shedding $49.60 to $1,622.40 an ounce.

 

The benchmark 10-year Treasury was rising 18/32, diluting the yield to 2.2%, while the U.S. dollar index was up 0.4% to $79.83.

163Comments
Apr 4, 2012 10:15AM
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THIS COUNTRY USED TO BE THE WORLD LEADER IN MANUFACTURING AND NOW....WE  RESORT TO A "STOCK MARKET" FOR OUR FINANCIAL HEALTH. HA, IF WE WERE BUSY AND PROFITABLE BEING THE WORLD LEADER IN PRODUCING PRODUCTS, ALL THE ECONOMIC WOES AND MEDIA DRIVEN ECONOMIC PROPAGANDA WOULD CEASE IN THIS COUNTRY AND THE BS DRIVEN STOCK MARKET WOULD HAVE TO FACE ITS FATE AND BE ACCOUNTABLE TO COMPANIES TRUE ECONOMIC PERFORMANCES.....THUS CREATING A SOUND LONG TERM INVESTMENT FOR THE AMERICAN PEOPLE!
Apr 4, 2012 11:19AM
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THE REAL FEAR IS THAT WE NEVER CAME OUT OF THE RECESSION ,THERE WAS NO RECOVERY ONLY THAT THE GREAT DEPRESSION CONTINUES
Apr 4, 2012 12:35PM
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I'm not sure I understand what "entitlement" means?  I paid into Medicare and Social Security for 44 years and now I am "entitled" to my money + interest back. No?  Apparently some feel I should donate my hard earned retirement fund, the one the government forced me to contribute to, back to them.  Oh, I forgot.  They already took the money (from the Social Security Trust Fund).  So now they don't think I should get my retirement and further, that they should not have to pay the money they stole back.  I worked long and hard for my "entitlement" money.  Perhaps someone should coin a phrase that separates the hard working but now retired "takers" from the ones who never worked a day in their life?  And then maybe they should stop screaming about entitlement programs as if they are give aways?  And maybe the US government should stop borrowing 42 cents out of every dollar they spend?  ANY country could "live the dream" if they could borrow their way to it!
Apr 4, 2012 9:57AM
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 More quantitative easing - stocks, gold, commodities, bonds and inflation go up. Less quantitative easing gold, commodities, stocks, bonds and inflation go down. The federal Reserve, congress and the president are there for the rich not the American people.
Apr 4, 2012 11:18AM
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Endeavor, WHY should government PAY for any of these?   Why don't the person that wants these things PAY for them...  You seem to believe in the ENTITLEMENT state...  Socialism at it's finest.

 

Planned Parenthood is like PBS...  NEITHER should recieve taxpayer dollars PERIOD!

 

Fund you own sexual needs...  I didn't see the right to fornicate mentioned in the constitution as something the government needs to PAY for...  Not even the "pursuit of happiness" clause goes that far...

 

Quit asking for government to PAY your way in the world...

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Stock market advances have come about not because of any strength in the economy or the market, but because it is the only game in town.  Yields on other investments remain dismal.  Job "creation" is pathetic as unemployment remains a prolem with no solution in sight.  Consumer spending increases are more than offset by increases in consumer debt.  We are trading one bubble for another with no solution in sight.  Washington provides no solutions, only spin to try to put lipstick on this pig.
Apr 4, 2012 9:36AM
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Automan,

 

I thought a lawyer was a trained liar for hire?  Our  politico's are just liars... 

Apr 4, 2012 11:22AM
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You all sound like a bunch of 1st graders, calling each other names and choosing sides. Grow up. Want to know why America is in the shape it's in? Because of this us vs. them mentality, instead of, how do we all fix this? Grow up, the whole lot of you. 
Apr 4, 2012 11:33AM
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The market is tanking for the same reason it always tanks. Or soars. It's because the market has absolutely nothing to do with any underlying economic reality. It's just a financial mood ring, driven entirely by emotions, emotions that have their origins in rumor, astrology, god knows what.

Add to that the fact that speculators make money only in a volatile market. Fast trading doesn't do you any good in a dull, stable market. So it's in the interests of the speculators to generate lots of motion. Up or down, it doesn't matter, as long as it's moving.

Apr 4, 2012 10:09AM
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Romney, Santorum, Gingrich, Paul, and Obama.

 

Really, is the best we can do.  I don't care whether you are a democrat, republican,

independent, or liberatarian you should not be proud of who will have to vote for

in November.

 

This is a real case for "none of the above" to be a choice on the ballot.

Apr 4, 2012 11:56AM
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Add to that the fact that speculators make money only in a volatile market. Fast trading doesn't do you any good in a dull, stable market. So it's in the interests of the speculators to generate lots of motion. Up or down, it doesn't matter, as long as it's moving.

I think there is a lot of truth here.  With the ascent of finance in the US economy has come the decline of the middle class and job growth.  From 2000 on the rate of job growth in this country  has been pathetic by historic standards.  Yet the increase of wealth by the upper 1% has been massive during this same period.  Much of the cheap money from the fed didn't go into investments that grew jobs but into speculative bets that brought huge rewards for Wall Street until the whole house of cards collapsed.  Of course then the entitled ones not only demanded a bailout but they paid themselves huge bonuses right after getting bailed out. These are the ones who rule this country with their lobbyists and the revoving door between big business and government.  Some of you blame the Democrats, some the Republicans but I would say that too many in both parties are corrupt and service in government has become a conduit for self enrichment while in turn helping those who financed your campaign.

Apr 4, 2012 11:01AM
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Congress passed a law today against insider trading for politicians .  Market tanks!
Apr 4, 2012 11:13AM
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Such an extreme far left website MSNBC has become...  First they doctor video and audio tapes to spoort their leftist agenda, and then when they are caught at it they claim it was an error...  Please tell me how you edit a audio tape to ssay something completely different than what was said?

 

Simply amazing at how far the left will go to slant the truth...   Like the liar-in-theif Obama...

 

I am amazed that we have an administration far more corrupt than Nixon's.  This November we need to fire at least 2000 more donkey office holders at every level of government.  I am so glad that the Senate looks to lose 7-8 democrats, and the house looks to pic up a few more Republican seats as well...  Good bye "57 States".  You will go down as the dumbest, most corrupt and incompetent president in the last 100 years...

Apr 4, 2012 9:51AM
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The house of cards has no foundation. Global economy issues will dog the market from now until the end of the bond market. When the bonds start to dump heavily then it's over. I got out of stocks in 09.  Only the folks with billions to put down and move around are the winners. Pretty soon they will be holding a bunch of fire starting material. Money is worthless has long has a rouge entities like ( The Federal Reserve, IMF, or any other global banker has there hand in it.)
Apr 4, 2012 1:10PM
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During the Clinton years Congress took  $ 2.4 trillion dollars from the SS trust fund in order to give the appearance that they were running a balanced budget (which they really were not).  As designed and intended, the SS trust fund would have weathered the baby boomer issue without any tweaking of the system or borrowing.  Now everyone is screaming about how SS is such a burden to the country.  The actual reason it is an issue is that Congress must now pay back the money they took from the trust fund AND fund the upswing in demand caused by the baby boomers.  That is a tall order but it is NOT the fault of those who paid in for many years as required.  Now they are trying to demonize us older citizens because we getting back what we are supposed to get from the system.  Hey, a deals a deal.
Apr 4, 2012 10:22AM
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Anyone who thinks the government will rein in healthcare costs just hasn't been paying attention.  I saw a report on a new tailored cancer drug, made from your own DNA.  Average increase in life expectancy : 4 months.  Cost per treatment : $93,000.  That's right, $93,000 or if you prefer, $23,000 for each additional month of life.  Approved by Medicare?  YES!  Apparently, when approving treatments for Medicare, cost is not something they are allowed to consider.  But we trust the government to bend the health care curve downwards?  Good luck with that!
Apr 4, 2012 11:01AM
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Endeavor, the Ryan Budget passed the house...  Now how many votes did '57 States" budget get in the house?  How many Democrats voted for it?   The president is truely clueless.  Almost a trillion in new spending?  Another 600 billion in new taxes?   He truely is out of touch. 

 

You cannot Tax, SPEND, BORROW and Debase your way to prosperity no matter  what the Donkey minions say...

Apr 4, 2012 9:34AM
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Hmmm...

 

Now that Greece haas been bailed out, I am sure Spain, Portugal, Ireland, Italy, and others will be waiting in line.  After all if you can have half your debt wiped out and it not be considered a default, why not get in line.   I think the Euro is doomed.

 

And Borgman, you are so right.  We have a massive budget deficit, Obama's plan, more spending and borrowing.  Ben Bernache is willing to help by debasing the dollar further. 

 

We need to get our fiscal house in order.  How do you stop a massive  budget  deficit?  You stop spending.  Then you look for ways to raise revenue to REDUCE debt.  You do this in your personal lives.  Obama is so clueless that his last two budgets could not get a SINGLE democrat to vote for them!  Not even Nancy Pelosi could vote for them...  Simply amazing.  We need a leader who is not clueless.  Our deficits are 4 times what W had. 

Apr 4, 2012 9:36AM
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FUTURE HEADLINES - Stocks up on europe deal ! Stocks waver on the Euro !! Stocks dip on fear of Euro collapse ! Market Rally to Euro bailout proposal !! TRANSLATION = The world economy is doomed !!
Apr 4, 2012 9:56AM
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Answers are easy when you run for office because you don't need to get Congress to approve. The issue is once you get elected you become more completely informed and realize that the only way to move anything forward is to offer a compromise that is middle of the road that is ridiculed by both the far right and far left. The other option is to hold to your guns and have a stalemate for 4 years.
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