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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.661900 |
| Euro to US Dollar | 1.485000 |
| Japanese Yen to US Dollar | 0.011100 |
| Canadian Dollar to US Dollar | 0.930600 |
The stock market drove investors crazy with volatile trading today.
The Dow Jones industrials closed with a gain of 14.5 points, or 0.1%, to 13,128. The Nasdaq Composite Index was down 6.6 points, or 0.2%, to 2,559, and the Standard & Poor's 500 Index slipped 1.9 points, or 0.13%, to just under 1,452.
But what a strange trip it was to end the day basically unchanged.
After opening up 60 points, the Dow lost all of that gain and fell to a loss of nearly 100 points. And then it was off to the races as a sudden, sharp rally in financial stocks reversed the downturn and sent the Dow to a 94-point gain by 3:20 p.m.
Then the gains vanished a second time.
Recession fears weigh on stocks
What happened? The short answer is investors couldn't find a reason to push the market ahead of the Federal Reserve's Sept. 18 meeting. The central bank is expected to cut its key federal funds rate to 5% from 5.25%, where it's been for more than a year.The longer answer is that worries about growth and the possibility of recession gutted a nice rally in tech stocks, started when Intel (INTC, news, msgs) raised its third-quarter revenue guidance.
A big rebound in financial stocks couldn't offset the pullback.
Intel, up more than 1.2% in the morning, finished the day down 0.5%. Investment banking giant Goldman Sachs (GS, news, msgs), down 0.8% shortly before noon, soared to a gain of 3.4% by 3 p.m. before falling back to $183.61, up 2.6% on the day.
The market's overall pullback was a big disappointment and sets up Tuesday at least as a volatile day and possibly the entire week while investors around the world wait for the Fed to make its decision.
Countrywide Financial (CFC, news, msgs) fell 5.5% to $17.21. That was a four-year low and the day's worst performance among S&P 500 stocks. The sell-off was partly a reaction to Countrywide's announcement it would cut up to 12,000 jobs to cope with the mortgage crisis. Also, Merrill Lynch said bond market losses "continue to handicap" the largest U.S. mortgage company, Bloomberg News reported.
Home Depot's (HD, news, msgs) warning that real-estate prices won't recover until late next year sent the biggest home-improvement retailer to the lowest level in three weeks. The stock closed down 1.2% to $33.81.
Meanwhile materials stocks, especially metals, were slumping. Alcoa (AA, news, msgs) was the Dow loser, falling 3.% to $33.72, contributing nearly 11 points to the Dow's decline. U.S. Steel (X, news, msgs) was down 3% to $91.05, and Nucor (NUE, news, msgs) was off 1.1% to $53.29.
Energy shares were lower because of word on Wall Street that Saudi Arabia may push for an increase in output at Tuesday's meeting of the Organization of Petroleum Exporting Countries in Vienna.
The Amex Oil Index ($XOI.X) was off 0.8% to 1,368. ExxonMobil (XOM, news, msgs) fell 1.7% to $85.03. Valero Energy (VLO, news, msgs) slid 1.9% to $68.03.
The energy stock declines came despite a big jump in energy prices. Crude oil closed at $77.49 in New York, up 1%. The move came when natural gas jumped 7% to $5.891 per million British thermal units as Mexico's Pemex said six pipeline blasts had shut its system down.
| Mon. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $77.49 | $76.70 | $0.79 | 4.66% | 26.93% |
| Heating oil (per gallon) | $2.1716 | $2.1432 | $0.0284 | 6.34% | 35.90% |
| Natural gas (per million BTU) | $5.8910 | $5.5010 | $0.3900 | 7.74% | -6.48% |
| Unleaded gasoline (per gallon) | $1.9786 | $1.9864 | -$0.0078 | -3.57% | 23.50% |
Intel, Advance Micro show optimism
Intel cheered the market early on when it raised its third-quarter revenue forecast to $9.4 billion to $9.8 billion. Earlier, the chip giant had forecast revenue of $9 billion to $9.6 billion.Intel's announcement came on the same day that Advanced Micro Devices (AMD, news, msgs) introduced its next-generation microprocessor, code-named Barcelona, in a long-awaited bid to win market share from Intel. AMD shares were up 2% to $12.86, and the Philadelphia Semiconductor Index ($SOX.X) was up 0.6% to 496.
Apple (AAPL, news, msgs) was up nearly 3.3% to $136.11 after reporting it had sold its 1 millionth iPhone on Sunday.
Countrywide big job cuts
Countrywide Financial said over the weekend that it will cut between 10,000 and 12,000 jobs, or up to 20% of its work force, over the next three months.The move is the latest by Countrywide to try to weather the mortgage mess. Last month the company said that it was tapping $11 billion in bank lines of credit; Bank of America (BAC, news, msgs) later invested $2 billion in Countrywide.
Countrywide shares have lost 59% since the beginning of the year.
- Video: Is the panic over?
"We are taking decisive action to ensure that Countrywide continues to be well-positioned for further success," Countrywide CEO Angelo Mozilo said in a press release.
Countrywide had previously announced 500 job cuts in its subprime lending unit and an additional 900 cuts in its mortgage production units.
| Mon. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 3.870% | 3.940% | -0.070 | -3.01% | -20.78% |
| 5-year Treasury note yield | 3.983% | 4.020% | -0.037 | -6.30% | -15.27% |
| 10-year Treasury note yield | 4.324% | 4.368% | -0.044 | -4.69% | -8.20% |
| 30-year Treasury bond yield | 4.641% | 4.693% | -0.052 | -3.93% | -3.67% |
| Currencies | |||||
| U.S. Dollar Index | 79.71 | 79.73 | -0.02 | -1.28% | -4.46% |
| British pound in dollars | $2.0284 | $2.0292 | -0.0008 | 0.51% | 3.51% |
| Dollar in British pounds | £0.4930 | £0.4928 | 0.0002 | -0.50% | -3.39% |
| Euro in dollars | 1.3808 | 1.3785 | 0.0023 | 1.28% | 4.61% |
| Dollar in euros | € 0.7242 | € 0.7254 | -0.0012 | -1.27% | -4.41% |
| Dollar in yen | ¥113.62 | ¥112.85 | 0.77 | -1.84% | -4.54% |
| Commodities | |||||
| Gold | $712.20 | $709.70 | $2.50 | 4.44% | 11.63% |
| Copper | $3.2560 | $3.2515 | $0.004 | -4.15% | 13.41% |
| Silver | $12.1800 | $12.7600 | -$0.58 | -0.41% | -1.35% |
| Crude oil (NYMEX) (per barrel) | $77.49 | $76.70 | $0.79 | 4.66% | 26.93% |
Philly Fed president's words of caution
Friday's stock slump didn't seem to faze Federal Reserve Bank of Philadelphia President Charles Plosser.Plosser cautioned Saturday that the dismal jobs report should not by itself prompt the Federal Reserve to cut interest rates. "I believe disruptions in financial markets can be addressed using the tools available to the Fed without necessarily having to make a shift in the overall direction of monetary policy," Plosser said in a speech to the Pennsylvania Association of Community Bankers in Hawaii.
"There's a lot of conflicting data out there that's going to be tricky to get through," Plosser said to Bloomberg News after the speech.
Plosser is not the only Fed official talking ahead of the Fed meeting Sept. 18: Atlanta Fed President Dennis Lockhart and San Francisco Fed President Janet Yellen both spoke at events today.
Lockhart, who is not a voting member of the Fed's policy committee, said that Friday's jobs numbers should be viewed in tandem with the strong retail sales reports and continued consumer spending.
Yellen, who spoke separately, said that the housing slump has put "downward pressure" on the economy. Yellen also said that falling home prices, along with rising unemployment could hurt consumer spending in the future.
- Video: Is a recession coming?
Fed Chairman Ben Bernanke will speak tomorrow in Berlin.
Other analysts are talking about the Fed as well. "In order to get out in front of the real risk of recession, I think the Fed has to cut," Carl Tannenbaum, chief economist at LaSalle Bank in Chicago, told Bloomberg News. "A strong job market had been the foundation for a lot of what's been going well in the economy and for why a lot of us thought the economy could ride out the storm."
Investor buys a chunk of Bear
Shares of Bear Stearns (BSC, news, msgs) rose 2% to $107.50 this afternoon after the company said British billionaire Joseph Lewis has acquired 8.1 million shares of Bear Stearns stock, according to a regulatory filing with the Securities and Exchange Commission.Lewis, who resides in the Bahamas, spent $860.4 million buying his 7% stake in the investment bank over the past few weeks as an investment. He's now the investment bank's largest shareholder.
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Shares of Bear have lost 35% since the beginning of the year.
Who bought the golden iPhone?
While the buyer of Apple's 1 millionth iPhone won't get to indulge in a Willy Wonka-style candy land, Apple's sales are certainly sweet. The company had forecast sales of 1 million by the end of September.The news comes after Apple cut the price of the device, sending customers who had already purchased the iPhone into an angry frenzy. CEO Steve Jobs then apologized and offered those customers a $100 credit.
Analyst downgrades: Palm and the investment banks
Handheld maker Palm Inc. (PALM, news, msgs) was downgraded to "underweight" from "equal weight" at Lehman Bros. today because of weakening demand for the company's Treo smart phone.The move follows a report last week from research group iSuppli that said Apple's iPhone outsold all smart phones in the U.S. in July. Apple sold 220,000 iPhones in July, 1.8% of the entire U.S. mobile-phone market, iSuppli said.
Palm shares fell more than 3.1% to $14.89 this afternoon.
Meanwhile, brokerage stocks generally moved higher even though Keefe, Bruyette & Woods analyst Lauren Smith had some concerns about a number of big investment banks. Smith expects Lehman Bros. (LEH, news, msgs), Morgan Stanley (MS, news, msgs), Bear Stearns and Goldman Sachs to report that earnings fell in recent months because of the mortgage- and credit-market crunches.
"The markets are waiting with bated breath for the bulge-bracket investment banks with August-end quarters to report earnings results," Smith wrote in a note, according to Bloomberg News. "Lots of fiction as well as fact have kept the markets in turmoil for several months and the global investment banks are in the direct line of fire."
Despite the downgrades, all of the stocks were higher.
Disney to launch toy checks
Walt Disney (DIS, news, msgs) is taking matters into its own hands.The New York Times is reporting that Disney is organizing a system to randomly test Disney-branded products that are sold in stores for lead paint and also to test the products' durability.
The move could be read as a slap at Mattel (MAT, news, msgs), which makes many toys that carry Disney licenses, as well as other toy manufacturers.
"It sends the message that we are looking over their shoulders," Disney's consumer products division chairman Andy Mooney told the paper.
Shares of both Disney and Mattel were down slightly on the day.
By Charley Blaine and Elizabeth Strott
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