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The stock market just can't get traction.
After a decent rally Wednesday and a strong open today, a weaker-than-expected report on manufacturing from the Federal Reserve Bank of Philadelphia slammed the market yet one more time.
The Dow Jones industrials finished down 143 points, or 1.2%, at 12,284. The Nasdaq Composite Index fell 27 points, or 1.2%, to just under 2,300, and the Standard & Poor's 500 Index was off 18 points, or 1.3%, to 1,343.
It was the Dow's 12th loss of 100 or more points this year and its largest since Feb. 14, when the blue-chip index shed 175 points. The loss came after a 90-point gain Wednesday and a 76-point move higher right after today's open.
The selling overwhelmed a big gain today for Research In Motion (RIMM, news, msgs), the maker of the BlackBerry mobile device, and an upgrade for networking giant Cisco Systems (CSCO, news, msgs).
Research In Motion was up 9% to $106.69, its best level since January and the best performer among stocks in the Nasdaq-100 Index ($NDX.X). The move came after the company raised its outlook for new subscribers in the fourth quarter by 15% to 20%, citing the popularity of smart phones throughout the holiday selling season.
Cisco closed down a penny at $23.19; it had been up as much as 3.4% in the morning.
The selling was exacerbated by the first decline in the price of crude oil in six trading sessions in New York. Crude for April delivery fell 1.5% to $98.23. On the last day of trading for the March contract, crude closed at a record $100.74.
Crude's decline led investors to dump energy shares. ExxonMobil (XOM, news, msgs) was off 1.3% to $86.92. Chevron (CVX, news, msgs) fell 1.8% to $84.78.
One reason for crude's decline was a government report showing a big jump in domestic supplies. And oil investor T. Boone Pickens told CNBC this morning that he was shorting crude oil for now. The second quarter is typically the year's weakest for crude oil, he told CNBC. He thinks crude will cross back over $100 a barrel later on.
- Video: Boone Pickens on oil prices
While crude oil moved lower, other commodity prices, particularly gold, platinum and wheat, all moved higher. Gold closed at a record $949.20 an ounce, up $11.40, or 1.2%, from Wednesday.
For the year, the Dow is down 7.4%, the S&P 500 is off 8.6%, and the Nasdaq Composite has lost 13.3%. Since peaking on Oct. 9, the Dow is off 13.3%; the S&P 500 is down 14.2%. The Nasdaq has lost 19.6% since its peak on Oct. 31. The Nasdaq-100 is down 21%.
The day's decline was broad, with 27 of the 30 stocks in the Dow showing declines. In addition, 440 S&P 500 stocks fell on the day, along with 84 Nasdaq-100 stocks.
The Dow's winners: Verizon Communications (VZ, news, msgs), up 0.34% to $35.36; AT&T (T, news, msgs), up 0.32% to $34.47; and Wal-Mart Stores (WMT, news, msgs), up 0.2% to $49.79.
General Motors (GM, news, msgs) was the laggard, down 4.9% to $24.30. There was no specific company news to move the stock, but rising prices for metals hurt.
The Nasdaq-100 Index was down 21 points, or 1.2%, to 1,766 as key stocks moved lower, including Amazon.com (AMZN, news, msgs), down 5.1% to $69.90; Google (GOOG, news, msgs), down 1.2% to $502.86; and Apple (AAPL, news, msgs), down 1.8% to $121.54.
Tomorrrow's market got a bit of boost after the close when pharmaceutical maker Eli Lilly (LLY, news, msgs)and Tokyo-based Daiichi Sankyo said that the Food and Drug Administration gave their anti-clotting drug candidate prasugrel priority review.
The designation means the FDA will try to review the drug application within six months.
Lilly shares were up 3% to $51.16 in after-hours trading after falling 1.1% to $49.82 in regular trading.
| Thur. | Wed. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $98.23 | $99.70 | -$1.47 | 7.06% | 2.34% |
| Heating oil (per gallon) | $2.7381 | $2.7546 | -$0.0165 | 8.03% | 3.35% |
| Natural gas (per million BTU) | $8.8910 | $8.9650 | -$0.0740 | 10.12% | 18.82% |
| Unleaded gasoline (per gallon) | $2.5222 | $2.5852 | -$0.0630 | 9.23% | 1.26% |
The dreadful report from Philadelphia
What stopped an opening rally in its tracks was a report from the Federal Reserve Bank of Philadelphia showing that factory production in the mid-Atlantic region contracted this month, suggesting further slowing in the economy. The Philly Fed report is closely watched because the survey tends to mirror what's going on in the national economy.The Philly Fed index came in at a reading of -24, after a reading of -20 in January, which had been the lowest level since 2001. Economists had expected the index to rebound slightly to a reading of -11.
Readings above zero indicate expansion in the sector; readings below zero indicate contraction.
"The consensus is for economic growth to get weaker," Theodore Parrish of Henssler Financial Group in Kennesaw, Ga., told Bloomberg News.
Gold at a new high
While crude oil fell, gold jumped today, reaching a record intraday high of $958.20 an ounce before falling back to $949.20 at the close.The reason for gold's jump: traders' conviction that inflation will get worse. At the same, a drop in the dollar against the British pound, the euro and the Japanese yen gave gold additional upward momentum.
"Inflation is screaming," Leonard Kaplan, president of Prospector Asset Management in Evanston, Ill., told Bloomberg News. "Lowering rates is only going to make inflation worse and force people into commodities. The funds are piling into gold."
Ironically, bullion's big move did not translate into higher prices for gold stocks. Barrick Gold (ABX, news, msgs) was up 0.4% to $50.46. But the Amex Gold BUGS Index ($HUI.X) was down slightly on the day to 465.80.
Gold's move higher was part of a larger push by commodities. Wheat was at $1.026 a bushel in Chicago. Platinum hit a record $2,188.20 an ounce in New York, up $49.40 from Wednesday.
Gotta love those BlackBerrys
Apparently, that big BlackBerry outage last week was actually a result of a boom for smart-phone maker Research In Motion.The company said at the time that the three-hour e-mail outage was a result of an upgrade designed to increase capacity. Today, it told the financial markets just how much capacity it needs. Wall Street was delighted by the news.
Research In Motion said that it expects net subscribers to have grown by 15% to 20% in the fourth quarter because of strong holiday sales of its BlackBerry devices.
The new forecast would give Research In Motion 2.09 million to 2.18 million new subscribers in the quarter. The company had previously forecast net new subscribers of 1.82 million. It will report its earnings April 2.
Research In Motion reaffirmed its earnings forecast of 66 cents to 70 cents per share on sales of $1.80 billion to $1.87 billion.
"The seasonal slowdown in net subscriber account additions that we expected in the new year did not occur," Research In Motion Co-CEO Jim Balsillie said in a prepared statement.
The company expects the total number of subscribers to reach 14 million by the end of the quarter.
Cisco gets an upgrade
Tech giant Cisco Systems was trying to give a boost to the tech sector today.The stock was upgraded to "buy" from "hold" this morning at Citigroup. The networking company is attractively valued, Citigroup's analyst wrote in a note to clients, adding that the potential slowdown in demand that has been surrounding the tech sector won't be as bad as the weakness seen in 2001 and 2002.
Alas, the big selling wave took Cisco's bid for greatness.
Microsoft to open its doors
Microsoft (MSFT, news, msgs) this morning announced that it is taking steps to allow open access to many of its products. (Microsoft is the publisher of MSN Money.)The company said it will change its technology and business practices to create more openness and better interoperability of its products. Microsoft said it will publish thousands of pages of documents on its Windows products that had been protected as trade secrets.
The move toward open access is an effort to satisfy European regulators.
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"These steps represent an important step and significant change in how we share information about our products and technologies," said Microsoft CEO Steve Ballmer in a statement.
After the Microsoft announcement, the European Commission said it "would welcome any move towards genuine interoperability," the ability of software programs from different companies to work smoothly together and share information. But the commission noted that "today’s announcement follows at least four similar statements by Microsoft in the past on the importance of interoperability."
Microsoft shares fell 0.4% to $28.10. The stock has fallen 13% since the company announced its $44.6 billion offer for Internet company Yahoo (YHOO, news, msgs).
Fed rate cuts to slow?
The man who manages the biggest bond fund in the world cautioned that the Federal Reserve might not come to the rescue again.Pimco's Bill Gross told Bloomberg Radio that the rise in inflation may prevent the Fed from cutting rates further.
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Gross' comments follow the release of the Federal Open Market Committee (FOMC) minutes from its Jan. 29-30 meeting, when the Fed lowered its key rate by a half-point to 3%. The minutes showed that the Fed wants to keep interest rates low to help boost the slowing economy, indicating that it could continue to lower interest rates if necessary.
"With no signs of stabilization in the housing sector and with financial conditions not yet stabilized, the committee agreed that downside risks to growth would remain" after lowering the federal funds rate at its last meeting, the FOMC minutes stated.
Meanwhile, a report earlier Wednesday showed that inflation rose in January, bringing "stagflation" back into the vocabulary of many market players and observers.
In the 1970s, inflation was wage-based, Kevin Ferry of Cronus Futures Management told CNBC this morning. "This inflation is credit-fueled, and that part of the system is severely fractured."
Ferry went so far as to say stagflation doesn't exist. "People will talk about it for now and then will put it away for another 20 years."
St. Louis Fed President William Poole is one person who is focused primarily on rising inflation.
"The seeds of an inflation problem are sown several years in advance, and it is not always easy to see the seeds as they sprout," Poole said Wednesday in a speech at Truman State University in Missouri.
The Fed's rate-making committee will meet next March 18.
| Thur. | Wed. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 2.140% | 2.175% | -0.035 | 14.44% | -31.85% |
| 5-year Treasury note yield | 2.807% | 2.993% | -0.186 | -0.67% | -18.76% |
| 10-year Treasury note yield | 3.784% | 3.917% | -0.133 | 3.98% | -6.22% |
| 30-year Treasury bond yield | 4.553% | 4.644% | -0.091 | 4.57% | 2.11% |
| Currencies | |||||
| U.S. Dollar Index | 75.685 | 76.220 | -0.535 | 0.53% | -1.32% |
| British pound in dollars | $1.9639 | $1.9429 | 0.0210 | -1.39% | -1.28% |
| Dollar in British pounds | £0.5092 | £0.5147 | -0.0055 | 1.41% | 1.29% |
| Euro in dollars | 1.4821 | 1.4719 | 0.0103 | -0.33% | 1.41% |
| Dollar in euros | € 0.6747 | € 0.6794 | -0.0047 | 0.33% | -1.39% |
| Dollar in yen | ¥107.31 | ¥108.04 | -0.73 | 0.85% | -4.06% |
| U.S. dollar in Canadian dollars | $0.991 | $1.012 | $0.0030 | -0.84% | -0.18% |
| Canadian dollar in U.S. dollars | $1.009 | $0.988 | -$0.0031 | 0.79% | 0.11% |
| Commodities | |||||
| Gold | $949.20 | $937.80 | $11.40 | 4.76% | 13.27% |
| Copper | $3.8110 | $3.7190 | $0.09 | 7.69% | 25.32% |
| Silver | $17.8850 | $17.7600 | $0.13 | 4.48% | 19.87% |
| Crude oil (NYMEX) (per barrel) | $98.23 | $99.70 | -$1.47 | 2.86% | 2.34% |
J.C. Penney beats The Street
Department-store chain J.C. Penney (JCP, news, msgs) this morning reported fourth-quarter profit of $430 million, or $1.93 per share, a 10% drop from the $477 million, or $2.09 per share, it earned a year earlier.- Video: Three ETFs to buy now
Though J.C. Penney, like most other retailers, has been struggling with the economic and consumer-spending slowdown, the company said a shorter quarter helped prevent a bigger drop in profit.
Price cuts also lured shoppers into its stores, the company said.
Wall Street had been expecting earnings of $1.77 per share. Revenue dipped 4% to $6.39 billion, which was in line with analysts' estimates.
Shares rose 0.2% to $48.03.
Analog Devices' profit jumps
Chip maker Analog Devices (ADI, news, msgs) followed in Hewlett-Packard's (HPQ, news, msgs) footsteps and late Wednesday reported a jump fiscal-first-quarter profit.Analog Devices, which supplies chips to Cisco Systems, said it earned $370.7 million, or $1.22 per share, more than double the $153.2 million, or 44 cents per share, the company earned in the same quarter a year ago.
Earnings from continuing operations were 40 cents per share, a penny ahead of Wall Street's estimate.
Shares rose 3.3% to $28.63 this afternoon.
Revenue fell 2% to $613.9 million in the quarter, and Analog Devices cautioned that its second-quarter sales may miss Wall Street's estimate. The company said it expects revenue to be flat to up 4% in the current quarter, with earnings between 39 cents and 42 cents per share. Analysts expect Analog Devices to earn 42 cents per share.
By Charley Blaine and Elizabeth Strott, MSN Money
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