Where things stand after Friday's slump

Stocks tumble as Republicans balk at House Speaker Boehner's tax bill. But things could have been worse. Nike jumps on strong North American business. Trading ends early Monday, and markets are closed Tuesday for Christmas.

By Charley Blaine Dec 21, 2012 7:49PM
Stock index © Image Source/Getty ImagesStocks took a dive on Friday as investors reacted with dismay over the collapse of House Speaker John Boehner's effort to pass a tax bill that included higher taxes for people earning more than $1 million a year.

The Dow Jones industrials ($INDU) fell 121 points to 13,191. The Standard & Poor's 500 Index ($INX) dropped 14 points to 1,430, and the Nasdaq Composite Index ($COMPX) dropped 29 points to 3,021.

These were the worst losses for the major averages since Nov. 14. But there was more to the market than the losses alone. Here's what else you should know.

The losses could have been much worse. The Dow was down about 189 points around noon ET. The S&P 500 had dropped as many as 21 points. Futures trading overnight had forecast much bigger losses. So, the market's losses did attract some bargain hunting that trimmed the worst of the losses by about a third.

Look for a lot of volatility next week. Volume will be lower because many traders and money managers will take the week off. Plus, there are hopes some sort of bill can be crafted to minimize the potential effects of some $600 billion in taxes and government spending cuts. If someone starts to buy or sell heavily, the changes get magnified. But the moves may mean little until after the New Year. What happens in January may depend on how the fiscal cliff is resolved. The stock market closes Monday at 1 p.m. for Christmas Eve and will be closed Christmas Day.
The market finished higher for the week. The Dow was up 0.4%, with the S&P 500 up 1.2% and the Nasdaq up 1.6%. Put Friday's loss with the gains for the week, and you have a lot of investors still convinced that a fiscal cliff deal will get done. It may also mean that the economy may be stronger than anyone thinks and tough enough to weather much of the cliff's effects. What's the proof? Check the Dow Jones Transportation Average ($DJT), watched closely as a leading economic indicator. The index rose 3% on the week; all of its components were higher. The index is up 9% this quarter alone.

Stocks are still looking at a decent 2012. The Dow is up 8% for the year. The S&P 500 is up 13.7%, and the Nasdaq is sporting a 16% gain. December may show gains as well.

Nike was a big winner. Nike (NKE) was up $6.10 to $105.10, second-best among S&P 500 stocks. Late Thursday, the company reported fiscal-second-quarter earnings that beat Street estimates. The driver of the results was its North American business, which saw a 17% gain in revenue for the quarter. More important, the region also generated a 14% gain in orders for the fiscal third quarter.

Could Apple's slide be coming to an end? Apple (AAPL) finished down $5.30 to $516.43 on Friday after falling to as low as $510.24 right after the open. The shares were higher in after-hours trading. Here's why the shares may be bottoming: They fell to as low as $501.23 on Monday and never came close to that level again. Moreover, the shares have come close to $500 three times since mid-November and held each time.  Admittedly, that's not much solace for someone who bought Apple in mid-September. The shares are down 26.4% since their Sept. 19 closing high of $702.10.

Gold moved higher. That reflects worries about what the collapse of the Boehner effort means. Gold (-GC) finished at $1,660.10 an ounce, up $14.20. But it was down 2.2% for the week and 7.6% since hitting a closing high of $1,796.50 an ounce on Oct. 4. Also moving lower: yields on Treasury securities, reflecting an interest in safety. The 10-year Treasury yield fell to 1.754% from Thursday's 1.8%. Crude oil (-CL), however, fell as traders feared that a slowing economy next year might cut into demand.

Yes, there were broad losses. Only two of the 30 Dow stocks showed gains on Friday: American Express (AXP) and McDonald's (MCD). Bank of America (BAC) and Exxon Mobil (XOM) were the Dow laggards. Research In Motion (RIMM) was the day's big loser, falling 22.7% to $10.91 after earnings and its forecast disappointed investors.
22Comments
Dec 22, 2012 12:41PM
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The US Economy is being played like a HUGE Pyramid Scheme or "Legal" Ponzi. The Fiscal Cliff is upon us. We watched the Madoff fiasco in horror but we will stand by and follow our government over the cliff?

We are in fact being played like little pawns. The media says, "Don't worry, everything is going to be fine".

 

The government and the Stock Market - all a big con, devised to extract all your money and squander it away on whatever they see fit to spend it on.

 

The middle class - What middle class??? It's already vanished.

 

Look at what happened in Africa, South Africa. Poor government leads to 50+% unemployment, crime with staggeringly violent stats.

 

Be careful America, there is absolutely nothing in this world that is FREE - You should work hard and in theory you should do well and be comfortable but those who think they can run off to DES or the unemployment office for free money, beware. Too many parasites being supported in this country currently.

Dec 22, 2012 2:34PM
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There won't be a "fiscal cliff' as everyone terms it, looming.  We have gone beyond that.  The "socialists" want higher taxes, the "conservatives" want spending cuts.  Neither will work now, we have moved beyond a solution.  There are 2 problems which no one focuses on;  1. Federal Reserve and Government monetary policy, AKA "largess", hogs at a monetary feist with straws in the trough of money plenty.  2. Inflation, real inflation is now beyond 5% not the low 2% presented by the manipulators.  Our nation cannot recover, we are witnessing the slow motion decline of the US civilization.  A nation of people who would vote to elect a marxist socialist arrogant person who promises to rob from productivity to provide for non productivity have resorted to the mere destruction of America.  Obama is clueless as are Republicrats, if Obama really wanted to save the country he should have used his political capitol to enact sweeping tax reform.  Instead, he grew regulations and created a whole set of taxes in Obamacare.  Taxpayers are like plums, we get ripe and are picked by slovenly hogs we elect.   
Dec 21, 2012 11:46PM
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Markets didn´t have really sound reasons to crash, the Plan B that got withdrawn at the House was seen as having no chances of passing at the Senate. In addition to that, Obama had promised to veto it if it had passed. If a bill preventing the tax hike gets approved next week, we´re likely to see a huge rally. That´s also because the underlying economic scenario is seen as getting stronger lately, true or false.
Dec 22, 2012 9:01AM
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We played a bad game for 11 years (since April, 2001) and lost. Some say our National Debt is $16 Trillion, so we are $16 Trillion too much in unsustainable exchange markets. Platforms dominate the business sector, 100% of them need to go and 100% of what they took from America needs to go to reducing that $16 Trillion. Who can argue the logic of overturning administrative pay and grubbing gains and use it for rebuilding nation-sustaining industries? The whole GMO thing must go. If we are smart, we will stop random land development by sprawl supporters and design a new Master Plan that provides for our needs rather than desires. Sustainable food doesn't need to be flown in from Mexico and we don't need to operate single-occupant gas-burning vehicles any more. The alternative energy and fuel industries are very lucrative... as long as organized business and bribed government aren't involved. Handheld devices are social menaces. Steve Jobs died, Apple needs to as well. There is a rabid need by Big Business to bring China online as a super power. Let's don't and let it figure it's own future out. Hopefully, that won't be churning out smog and cheaply made crap goods and sending both to us. The way I see it... very few people are the architects of this disaster, with several layers more of simple-minded fools jumping on an unethical band wagon. We need to delete all of them to afford family survival here in America.
Dec 22, 2012 12:21PM
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The days when the market is down is when you buy.This when you make money.
Dec 22, 2012 4:35PM
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Anyway Hanukkah is waning, and Christmas is upon us; And Kwanza for some, I hope all of you have nice Holidays....And our best Hopes going forward for a Prosperous New Year.....

Cheers.. 

 

Thank you Charley Blaine, for keeping us informed in 2012.

Dec 22, 2012 3:43PM
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The money guys run around Wall Street screaming "the sky is falling"...when actually it doesn't. It makes for good headlines, and "experts"  proclaiming that they know what will happen in the near future. No wonder these folks are "frazzled". 
Dec 22, 2012 12:54AM
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The reason plan B failed was because Boehner's own party refused to allow even a tax increase on those making 1 million dollars and up. He couldn't even present it to the president since it was rejected by his own members. The most probable thing Boehner will do is get his moderate Republicans and form an alliance with the Dems and pass a compromise budget that the Senate and POTUS would sign off on.
Dec 22, 2012 1:23PM
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If that was our "Santa Rally" last week, He was drunk and ran his Reindeer into the Trees...

Gains of 60, 50, 15, and 25....were pitiful on the DOW,NAS,S&P and the RUT2K was a little brighter.

Not a great closing for the EOY....We have  3-4 days left for Redemption ???

 

Next week after the Holiday we will all be hanging 10 over the side of a precipice, with our nails bloodied, and a bunch of aholes threatening to whack our hands...

Prediction of an Eleventh Hour half azzed Deal, signed; Where everyone is pissed and will be altered and re-opened for addeums after the beginning of the year.

Dec 22, 2012 9:14AM
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"Boehner's doing the right thing. In 10 years, people will shake their heads and grumble, "Why did we vote in Obama? He was such a snake oil salesman." You've been warned."

 

In 10 years, America will still be recovering from the worst crime ever committed. There won't be any GOP left and one state in America will be reconstituted as a prison for financial pariah. We will have a new currency and a new social structure that balances, not creates two classes. The middle will be the mark. The greatest challenge moving ahead is unplugging the Internet and destroying data warehouse facilities. Data is the new enriched uranium and the Internet is a highway for toxicity. In 10 years, the majority of button pressers will be vision-less and wanting financial support. Obama isn't a snake oil salesperson, but Boehner and his Party of No are certainly terrorists. We were attacked financially and it ruined us-- the Fiscal Cliff and Plan B are irrelevant, wiping out bad politics and those who fund it is critical.

Dec 22, 2012 1:02PM
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Boohner is a goddamn fool for the Party he represents, and certainly not any Amercans..I know.

Big money, big lobbies, big wallets...

Really doubt he will have the job in 60 days as Speaker..?

He represents no one except "himself and his puppetmasters"....He is done.

Too bad he cannot be sent back to Ohio, permanently.

 

No Plan was offered, just a laundry list; That was best, left at home.

It was DOA, he knew it and so did everyone else.

A pitiful joke, so he and the other children could leave and go home to Momma for Christmas...

And brag how they had tried to do something, but FAILED...Because of everyone else.

 

Dec 22, 2012 2:36PM
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10 years from now most of you will be dead. That in itself will be positive except for the pack of fools you have bred to replace yourselves. 
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