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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.633720 |
| Euro to US Dollar | 1.398406 |
| Japanese Yen to US Dollar | 0.010414 |
| Canadian Dollar to US Dollar | 0.861846 |
The U.S. stock market had one of its worst opening days of any year after crude oil briefly touched $100 a barrel and gold hit a 27-year high. At the same time, a bad report on manufacturing set off new fears of a possible recession.
At the close, the Dow Jones industrials were down 221 points, or 1.7%, to 13,044. The Standard & Poor's 500 Index was off 21 points, or 1.4%, to 1,447, and the Nasdaq Composite Index was down 43 points, or 1.6%, to 2,610.
The Dow's point loss was its worst opening day ever, beating an old record of 141 points set on Jan. 2, 2001.
The percentage losses for the Dow and the S&P 500 were their worst since Jan. 3, 1983, when the Dow fell 1.8% and the S&P 500 fell 1.6%. It was the eighth-worst opening day percentage loss for the Dow and sixth-worst loss for the S&P.
The losses were briefly trimmed after the release of minutes from the Federal Reserve's Dec. 11 meeting that suggested the central bank sees more interest-rate cuts ahead. But the selling resumed after 3 p.m.
Crude hit $100 on just one trade at 12:10 p.m. ET on the New York Mercantile Exchange but promptly fell back. Crude closed up 3.8% to a record $99.62 a barrel. Many traders and analysts see crude closing above $100 soon -- perhaps this week or next.
Energy stocks moved higher. Devon Energy (DVN, news, msgs) was up 3.1% to $91.62. Schlumberger (SLB, news, msgs) jumped 2.3% to $100.58, its first close above $100 since Oct. 24.
Crude oil rose on concern that violence may further cut output in Nigeria, Africa's biggest producer, and on speculation U.S. petroleum inventories had fallen for a seventh straight week.
"As long as demand is greater than supply, the dollar is weak and the Fed accommodative, prices will move higher," said analyst Peter Beutel of Cameron Hanover, an oil consulting firm in Connecticut.
Stock Charts (Year)
Schlumberger
Devon Energy
"At the end of the day," he added, "Somebody will pay the price. Something has to give." Oil prices will have to move down. Inflation will have to rise sharply, or the global economy will have to slow down extremely.
Crude oil jumped 57.2% in 2007, partly due to the weakening dollar, the currency for most oil pricing. Plus, the market has been hit by supply shortages and disruptions for the last few years.
The Energy Information Administration will release its weekly data Thursday instead of today because of the New Year's Day holiday. The speculation, combined with renewed violence in Nigeria and terror worries in Pakistan helped crude to push higher, Robert Laughlin, a senior broker at MF Global, told Bloomberg News.
Oil has been flirting with $100 for some time; it hit a record intraday high of $99.29 on Nov. 21.
Stock investors hated the oil news. The market was already falling because of a weak report on manufacturing this morning from the Institute of Supply Management. The institute's monthly manufacturing index fell to 47.7 in December from 50.8 in November. Readings under 50 indicate contraction in the sector, while readings above 50 indicate expansion.
December's reading was the lowest since April 2003 and the first below-50 reading since January 2007. Economists expected a reading of 50.5. And it caused many investors to fear the U.S. economy was headed to a recession in 2008.
Tech stocks were dragging the market lower, in part because of weakness in semiconductors. Intel (INTC, news, msgs) was down 4.9% to $25.35 after Banc of America Securities downgraded the company to "neutral" from "buy," predicting upside will remain limited until the second half of 2008.
IBM Corp. (IBM, news, msgs) was down 3.2% to $104.69 and contributed 28 points to the Dow's loss. Seven of the 30 Dow stocks contributed at least 10 points each to the Dow's loss.
The one Dow winner was Pfizer (PFE, news, msgs), up 0.8% to $22.91.
| Wed. | Mon. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $99.62 | $96.00 | $3.62 | 3.77% | 3.77% |
| Heating oil (per gallon) | $2.7404 | $2.6370 | $0.1034 | 3.92% | 3.92% |
| Natural gas (per million BTU) | $7.7800 | $7.3860 | $0.3940 | 5.33% | 5.33% |
| Unleaded gasoline (per gallon) | $2.5600 | $2.4597 | $0.1003 | 4.08% | 4.08% |
Gold reaches $860
Gold closed at $860 an ounce in New York, up $22 from Monday. It peaked during the day at $864.20.Gold's close today was its highest since reaching $875 an ounce on Jan. 21, 1980. That would be the equivalent of $2,040 today.
The metal's jump is a reflection of inflation fears, analysts said, as well as a measure of investor concern about geopolitical uncertainty and turmoil.
Gold started a big move last week after the assassination of former Pakistani Prime Minister Benazir Bhutto.
Stock Charts (Year)
Newmont Mining
Blackstone
Gold stocks shot higher on the news. Newmont Mining (NEM, news, msgs) was the S&P 500 leader with a 7.3% gain to $52.39. <!heading text="GE Capital deal to buy PHH collapses "/>The new year isn't bringing any calm in the credit markets.
Residential-mortgage company PHH Corp. (PHH, news, msgs) said Tuesday that its $1.69 billion deal to be purchased by General Electric's (GE, news, msgs) GE Capital had fallen through. PHH said the deal collapsed because private-equity firm Blackstone (BX, news, msgs) could not secure financing to buy PHH's mortgage business from GE Capital, which was part of the deal.
The deal was announced in March.
Shares of PHH were down 3.1% to $17.10; GE shares slipped 0.8% to $36.76; and Blackstone fell 1.8% to $21.74.
PHH is seeking a $50 million termination fee from Blackstone.
Last year, $186 billion in private-equity deals collapsed as credit conditions tightened, according to Bloomberg statistics.
Citi to write down more?
Analysts don't think things will be getting much better for banking giant Citigroup (C, news, msgs).The bank could write down as much as $12 billion in the fourth quarter, Sanford Bernstein analyst Howard Mason wrote in a note to clients Monday. Mason said Citigroup could report a loss of 65 cents per share when it reports its fourth-quarter results on Jan. 15.
Citigroup has been slammed by the sinking subprime-mortgage market, with Chuck Prince forced to resign as CEO late last year.
Shares of Citigroup were down 1.8% to $28.92.
Analyst Dick Bove of Punk, Ziegel in New York told CNBC that he expects a $17 billion total write-down from the bank. Last week, Goldman Sachs (GS, news, msgs) analyst William Tanona wrote in a note to clients that Citi would likely increase the amount of write-downs to $18.7 billion.
Chips get a downgrade
Intel fell as part of an industrywide downgrade from Bank of America Securities today. Banc of America downgraded Advanced Micro Devices (AMD, news, msgs) to "sell" from "neutral," saying it would be pressured from rival Intel in the first half of the year. AMD shares fell 4.8% to $7.14.National Semiconductor (NSM, news, msgs) shares were down 5.4% to $21.41.
Starbucks (SBUX, news, msgs) shares fell 5.7% to $19.31 after Bear Stearns cut its rating on the coffee retailer to "peer perform" from "outperform."
Yahoo (YHOO, news, msgs) bucked the negative market trend after ThinkEquity.com boosted its rating on the Internet giant to "buy" from "accumulate." Shares of Yahoo rose 2% to $23.72.
Apple boosts market share
Apple (AAPL, news, msgs) had a tasty holiday treat on the first day of 2008.A survey by Net Applications showed that Apple's Mac operating system rose to a 7.3% market share in December 2007, from 6.8% in November. Microsoft's (MSFT, news, msgs) Windows operating system is still the dominating player, with 91.8% of the market.
Apple shares fell 1.6% to $194.84; Microsoft was off 1.1% to $35.22. (Microsoft is the publisher of MSN Money.)
Net Applications' survey tallies the number of visits to Web sites across the company's network.
| Wed. | Mon. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 3.170% | 3.140% | 0.030 | 0.96% | 0.96% |
| 5-year Treasury note yield | 3.271% | 3.455% | -0.184 | -5.33% | -5.33% |
| 10-year Treasury note yield | 3.901% | 4.035% | -0.134 | -3.32% | -3.32% |
| 30-year Treasury bond yield | 4.352% | 4.459% | -0.107 | -2.40% | -2.40% |
| Currencies | |||||
| U.S. Dollar Index | 76.695 | 76.235 | 0.460 | 0.60% | 0.60% |
| British pound in U.S. dollars | $1.9818 | $1.9873 | -0.0055 | -0.28% | -0.28% |
| U.S. dollar in British pounds | £0.5046 | £0.5032 | 0.0014 | 0.28% | 0.28% |
| Euro in U.S. dollars | 1.4734 | 1.4594 | 0.0140 | 0.96% | 0.96% |
| U.S. dollar in euros | € 0.6787 | € 0.6852 | -0.0065 | -0.95% | -0.95% |
| U.S. dollar in yen | ¥109.56 | ¥111.67 | -2.11 | -1.89% | -1.89% |
| U.S. dollar in Canadian dollars | $0.993 | $0.997 | -0.004 | -0.45% | -0.45% |
| Canadian dollar in U.S. dollars | $1.007 | $1.003 | 0.005 | 0.45% | 0.45% |
| Commodities | |||||
| Gold | $860.00 | $838.00 | $22.00 | 2.05% | 2.05% |
| Copper | $3.0640 | $3.0410 | $0.023 | -0.26% | -0.26% |
| Silver | $15.2900 | $15.2900 | $0.37 | 2.65% | 2.65% |
| Crude oil (NYMEX) (per barrel) | $99.62 | $96.00 | $3.62 | 3.77% | 3.77% |
By Charley Blaine and Elizabeth Strott
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