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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.659200 |
| Euro to US Dollar | 1.497454 |
| Japanese Yen to US Dollar | 0.011298 |
| Canadian Dollar to US Dollar | 0.945180 |
A day after the greatest rally since the Great Depression, stocks gave back a chunk of their gains.
The Dow Jones industrials finished down about 77 points, or 0.8%, to 9,311. The Standard Poor's 500 Index was down a modest 5 points, or 0.5%, to 998, and the Nasdaq Composite Index slid 65 points, or 3.5%, to 1,779.
The decline had little to do with the government's plan to buy stakes in many of the nation's banks. Financial stocks led the market all day, with the Select Sector SPDR-Financial (XLF, news, msgs) exchange-traded fund up 6.5% to $17.33. The ETF mirrors the financial sector of the S&P 500. Fifty-four of the 84 stocks in the sector were higher.
The larger problems were worry about the overall economy and softening trends in consumer spending, including less discretionary spending on things like soft drinks and iPods. Those concerns may pressure stocks on Wednesday. Futures trading suggests U.S. stocks will open down slightly.
The economic worries have also translated into a big shift in driving patterns has helped push crude oil under $80 and hit a number of energy stocks. Crude closed at $78.63 a barrel, down 3.2%.
Murphy Oil (MUR, news, msgs) fell 5.2% to $52.85. Chevron (CVX, news, msgs) dropped 1.9% to $68.54. Coal shares also fell: Peabody Energy (BTU, news, msgs) dropped 10.6% to $30.55.
Concern about global economic growth also slammed metals and agricultural stocks. Freeport-McMoRan Copper & Gold (FCX, news, msgs) fell 9.8% to $40.94. Fertilizer producer Mosaic (MOS, news, msgs) slumped 11.2% to $39.25.
Technology shares were the biggest drag on the market. Key stocks were lower, including Apple (AAPL, news, msgs), down 5.6% to $104.08. The company disappointed investors with only a minimal nod to the economic turmoil that might push consumers to be more frugal this holiday shopping season.
Apple did lower its least expensive laptop, the existing version of the entry-level MacBook, by $100 to $999. But in the updated versions of its MacBook and MacBook Pro machines, Apple focused mainly on adding features.
Meanwhile, Research In Motion (RIMM, news, msgs) fell 5.9% to $60.12, and Google (GOOG, news, msgs) 4.8% to $362.71
Intel cheers Street
Intel (INTC, news, msgs) was down 6.2% to $15.93, but shares moved 4.5% higher to $16.65 after hours after its third-quarter earnings beat estimates. Intel said it earned 35 cents a share in the third quarter, up 17% from a year ago. Net income was $2 billion on revenue of $10.2 billion. Net income was up 12% from a year ago, and revenue was up 1%.But the company did trim its fourth-quarter guidance because of economic turmoil, saying it expects revenue of $10.1 billion to $10.9 billion; the Wall Street estimate had been $10.7 billion.
"The bottom line is that they did better than expected," said Sean Conner, senior equity analyst at First American Funds in Minneapolis. "Gross margins came in better than people were expecting, for both this quarter and in its outlook for the fourth quarter."
The good news in the close
There was a bit of good news in the finish.Even if there was no follow-through from Monday's huge rally, the fact was that stocks came back strongly from their afternoon lows. The Dow had been down as much as 300 points at 2:45 p.m. ET and then recovered.
The market opened sharply higher, with the Dow up as much as 407 points, in part because of continued rallies in Asia and Europe. Japan's Nikkei 225 Index ($N225) was up 14.2% today, its biggest percentage gain ever.
The credit markets looked a little better. The London interbank offered rate, or Libor -- what banks charge each other for three-month dollar loans -- slid 12 basis points to 4.64% today, the biggest drop since March 17, Bloomberg News reported.
Two causes for today's market pullback are:
- Profit-taking. Taking money off the table is understandable after Monday's record-shattering 936-point rally. With the Dow's big open today, the blue chips were up 24% from their low on Friday morning. Even after the profit-taking today, the major averages are 18% higher than their Friday lows. (The Dow is still 34% off from its Oct. 9, 2007, high.)
- Economic worries. Many traders are worried that stresses in the economy will take time to resolve. Sales tax collections in many states are sharply lower, an indication of a slowing economy, according to the Liscio Report, a newsletter that tracks tax trends nationwide. The report noted that sales tax collections were slumping even before last week's gut-wrenching market crash.
Additional evidence of economic stress came from PepsiCo (PEP, news, msgs), which missed third-quarter earnings estimates. It said sales of soft drinks and Gatorade fell 3% as consumers cut spending at convenience stores in order to afford more expensive gasoline and food. The stock fell 11.9% to $54.40, the fifth-worst performance among S&P 500 stocks. Rival Coca-Cola (KO, news, msgs) fell 7.5% to $43.73.
CSX Corp. (CSX, news, msgs) acknowledged the economic realities this afternoon after reporting strong third-quarter earnings. But the company guided lower on fourth quarter earnings. The stock fell 3.5% on the day and was headed lower after hours.
Microsoft (MSFT, news, msgs) dragged the entire tech sector lower after Credit Suisse cut its profit estimates for the next two years on the expectation of slower computer sales. The stock fell 5.5% to $24.10. (Microsoft is the publisher of MSN Money.)
Microsoft will earn $2.10 a share in fiscal 2009, Credit Suisse analyst Philip Winslow said in a research note, down from his previous forecast of $2.13. Profit in fiscal 2010 will be $2.44 a share, less than Winslow's prior estimate of $2.53.
Microsoft and Oracle (ORCL, news, msgs) were the biggest drags on the Nasdaq-100 Index ($NDX.X), which tracks the largest Nasdaq stocks. The index was off 65 points, or 4.5%, to 1,365. Oracle was off 6.2% to $17.69.
Ten of the 30 Dow stocks were higher, along with 174 S&P 500 stocks and just nine Nasdaq-100 stocks.
| Index | Tuesday close | Chg. from Friday low |
|---|---|---|
Dow Jones Industrial Average | 9,310.99 | 18.12% |
S&P 500 Index | 998.01 | 18.73% |
S&P 100 Index | 474.19 | 19.34% |
Nasdaq Composite Index | 1,779.01 | 15.34% |
Nasdaq-100 Index | 1,364.59 | 14.09% |
S&P Midcap 400 Index | 593.73 | 17.16% |
Russell 2000 Index | 554.65 | 18.54% |
Dow Jones Utilities Average | 368.79 | 25.27% |
Dow Jones Transportation Average | 3,989.65 | 17.28% |
Nikkei 225 Index (Japan) | 9,447.57 | 16.42% |
FTSE 100 Index (Britain) | 4,394.21 | 13.43% |
Dax Index (Germany) | 5,199.19 | 20.69% |
Government and banks become partners
The government's plan involves spending as much $250 billion to buy shares of banks. Of that, about $125 billion will be invested in nine companies, including Citigroup, Bank of America and Goldman Sachs. Officials will also offer guarantees on new bank debts and start purchasing commercial paper in two weeks.| Company | Company |
|---|---|
Citigroup and JPMorgan will get $25 billion, Bank of America and Merrill will get $12.5 billion, Goldman and Morgan Stanley will get $10 billion, and Bank of New York and State Street will each get $3 billion, reports said. The banks are expected to get the funds before the end of the year.
Shares of eight of the nine companies jumped sharply today, with Citigroup up 18.2% to $18.62, Wells Fargo up 10.3% to $33.52 and Morgan Stanley up 21.2% to $21.94. The sole laggard was JPMorgan Chase, which was off 3.1% to $40.71.
"These are healthy institutions, and they have taken this step for the good of the U.S. economy," Treasury Secretary Hank Paulson said today.
More from MSN Money
"The consensus was so strong towards direct equity injections that there was literally no dissension on the point," Jared Bernstein of the Economic Policy Institute told The Wall Street Journal. "The only head-scratching is why did it take us so long to get here."
| Mon. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
Crude oil (NYMEX) (per barrel) | $78.63 | $81.19 | -$2.56 | -21.87% | -18.08% |
Heating oil (per gallon) | $2.2597 | $2.3410 | -$0.0813 | -21.06% | -14.71% |
Natural gas (per million BTU) | $6.7270 | $6.6880 | $0.0390 | -9.56% | -10.10% |
Unleaded gasoline (per gallon) | $1.8848 | $1.9176 | -$0.0328 | -24.14% | -24.33% |
Banco Santander buying Sovereign
Spain's Banco Santander will buy the rest of Philadelphia-based thrift Sovereign Bancorp (SOV, news, msgs) for $1.9 billion, or $3.81 per share. It bought a 25% stake for $3.3 billion in 2006.The deal "is strategically positive because it will allow Santander to strengthen its position in the United States and apply its business model to a company it knows," Spanish brokerage Renta 4 said in a note to investors on Monday.
Shares of Sovereign fell 6.3% to $3.45.
Late Monday, Sovereign also reported a third-quarter net loss of $982 million, or $1.48 per share.
J&J boosts guidance, PepsiCo will cut jobs
Dow component Johnson & Johnson (JNJ, news, msgs) said third-quarter profit rose to $3.31 billion, or $1.17 per share, up from $2.55 billion, or 88 cents per share, last year. The results topped Wall Street's estimate of $1.11 per share.J&J also increased its forecast for 2008 earnings to between $4.50 and $4.53 per share; the consensus estimate is for $4.50 for the full year.
J&J shares were up 2.1%, to $64.
PepsiCo, meanwhile, said it will eliminate 3,300 jobs worldwide as it tries to restore growth to the North American beverage business.
The company earned $1.58 billion, or 99 cents per share, in the third quarter, down from $1.74 billion, or $1.06 per share, last year. Analysts had expected $1.06 a share.
PepsiCo said 2008 earnings would be between $3.41 and $3.44 per share, lower than a previous forecast of $3.72 per share, announced by the company in July.
GMAC tightens lending standards
GMAC, the financing arm of General Motors (GM, news, msgs) said it would limit auto loans to consumers with a credit score of 700 or higher.The median credit score is 720.
"The credit markets are tightening up everywhere, and this is just a reflection of that," GM spokesman John McDonald told Bloomberg News. "Dealers have a number of options for customers, including GMAC and noncaptive financing, to be able to finance vehicles."
GMAC is majority-owned by private-equity firm Cerberus Capital Management, which also owns a majority stake in Chrysler.
In related news, GM said that it will close a metal-stamping plant near Grand Rapids, Mich., and close its Janesville, Wis., sport-utility vehicle plant by the end of December, sooner than the company had expected.
"I am sick about what's happened here," Greg Golembiewski, president of the United Auto Workers local at the Wisconsin factory, told The Associated Press. "I am devastated. I'd like not to believe what I heard today. It's like a bad dream."
The plants employ more than 2,700 workers.
Shares of GM were slammed last week, sinking to levels not seen since 1951, as concerns about its ability to survive plagued investors. GM was up 0.5% to $6.54.
Andy Rosenbaum contributed to this report.
| Tues. | Mon. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
Treasurys | |||||
13-week Treasury bill | 0.235% | 0.210% | 0.025 | -73.89% | -92.52% |
5-year Treasury note yield | 2.963% | 2.762% | 0.201 | -0.77% | -14.24% |
10-year Treasury note yield | 4.023% | 3.861% | 0.162 | 5.12% | -0.30% |
30-year Treasury bond yield | 4.260% | 4.137% | 0.123 | -1.05% | -4.46% |
Currencies | |||||
U.S. Dollar Index | 81.640 | 82.215 | -0.575 | 2.87% | 6.45% |
British pound in dollars | $1.7403 | $1.7413 | -0.0009 | -2.37% | -12.51% |
Dollar in British pounds | £0.5746 | £0.5743 | 0.0003 | 2.42% | 14.30% |
Euro in dollars | $1.3622 | $1.3602 | 0.0020 | -3.39% | -6.80% |
Dollar in euros | € 0.7341 | € 0.7352 | -0.0011 | 3.51% | 7.29% |
Dollar in yen | 102.14 | 101.98 | 0.16 | -3.67% | -8.68% |
Canadian dollar in U.S. dollars | $0.861 | $0.873 | -$0.0122 | -8.52% | -13.34% |
U.S. dollar in Canadian dollars | $1.163 | $1.146 | $0.0170 | 9.31% | 15.38% |
Commodities | |||||
Gold | $839.50 | $842.50 | -$3.00 | -4.69% | 0.18% |
Copper | $2.3945 | $2.3125 | $0.08 | -16.83% | -21.26% |
Silver | $11.0600 | $10.7900 | $0.27 | -9.90% | -25.87% |
Corn | $4.1125 | $4.1150 | $0.00 | -15.64% | -9.71% |
Crude oil (NYMEX) (per barrel) | $78.63 | $81.19 | -$2.56 | -21.87% | -18.08% |
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