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Friday July 10, 2009 3:11 PM ET
SmartMoney
Published July 24, 2008 4:26 PM  |  A A A
Breaking News by Mark Glassman (Author Archive)

Dow Drops 283 Points

News at a Glance



  • Selloff Smarts: Stocks fall sharply on housing data, Dow loses 283.


  • Home Surplus: Existing home sales fell sharply in June.


  • Ford's Flop: Automaker lost $8.67 bln in Q2.


  • Unemployment Rises: Initial jobless claims top 400k.


    • The Lowdown



    More bad news from the housing market triggered a broad selloff Thursday that sent the major indexes tumbling.

    Stocks fell sharply as traders after a report showing unexpected weakness in demand for existing homes stoked fears about the health of the larger economy. The Dow Jones Industrial Average gave back nearly all of this week's gains. The blue-chip index lost 283 points to finish the day at 11349. The Nasdaq fell 46 to 2280, and the S&P 500 dropped 30 to 1253.

    Banks were hit particularly hard after PIMCO manager Bill Gross said the housing crisis could cost the nation's financial institutions $1 trillion. Citigroup (C), JPMorgan Chase (JPM) and Bank of America (BAC) each fell more than 6% on the day.

    Most sectors took heavy damage. Consumer cyclicals, techs, capital goods, materials and telecoms were all firmly in the red. Transportation stocks and consumer staples also fell.

    Energy stocks also declined in spite of a small rebound in oil prices. By 4:05 p.m., crude traded up 93 cents on the day at $125.37 a barrel.

    The health care sector, traditionally a recession play, edged up after strong earnings from Big Pharma. Bristol Myers Squibb (BMY) reported an 8.2% bump in second-quarter profit and said it plans to cut costs by $1 billion by 2012. Separately, Eli Lilly (LLY) said profits climbed 44% but missed analysts' forecasts by a penny a share.

    The selloff began after the National Association of Realtors released a disappointing report on the housing market. The annual rate of existing home sales fell to 4.86 million in June, well below the annual rate economists had expected.

    Treasury Secretary Henry Paulson has said the financial markets will not stabilize and the larger economy will not recover until the housing market improves. The latest data on home sales were not what he had in mind.

    The labor market looked anemic after the latest weekly unemployment report. Initial jobless claims rose to 406,000 last week, sharply above economists' estimates.

    The latest batch of earnings from large-caps did little to brighten the outlook. Ford (F) took a heavy loss on more than $8 billion in write-downs. However, 3M (MMM) beat the Street on international sales.


    Corporate News



  • Ford (F) swung to a second-quarter loss and missed estimates on heavy write-downs and weak U.S. sales. The firm lost $8.67 billion, or $3.88 a share, down sharply from a net gain of $750 million, or 31 cents a share. Excluding more than $8 billion in write-downs, Ford lost 62 cents a share, well below Street estimates of a loss of 27 cents a share. Ford also said it would ramp up its transformation plan with a "small car offensive," in which the firm would bring six European models to the U.S. over the next four and a half years.


  • 3M (MMM), the diversified manufacturer and Dow component, topped analysts' second-quarter estimates as strong sales in emerging markets helped offset weak U.S. revenues. 3M earned $945 million, or $1.33 a share, up from $917 million, or $1.25 a share. Excluding one-time items, the firm earned $1.39 a share, 4 cents above the Street. The manufacturer's results are often used to gauge larger economic conditions.


  • Nokia (NOK) and Qualcomm (QCOM) ended a three-year patent dispute, the firms said. Under the 15-year, Nokia will make an initial payment to Qualcomm for the right to use its technology in Nokia's handsets. Nokia will also pay a reduced fee for each handset that includes Qualcomm-patented chipsets.


    • The Economy



  • Initial jobless claims rose to 406,000 last week, up from a revised 372,000 in the prior week, the Labor Department said. Economists had expected the number of people seeking unemployment benefits for the first time to come in at 380,000. REPORT


  • The annual rate of existing home sales fell to 4.86 million in June, down from a revised annual rate of 4.99 million in May, the National Association of Realtors said. Economists had expected a smaller dip to a rate of 4.95 million sales a year. REPORT


    • ReadMe



  • BusinessWeek on oil prices: High energy costs may hurt consumers, but in some ways, they can benefit the larger economy. STORY


  • The New York Times on oil hunting: As much as 20% of the world's undiscovered fossil fuels could lie beneath the Arctic Circle, according to the United States Geological Survey. STORY


  • Slate on selling assets: As American companies (financials, in particular) struggle to right their balance sheets, they are offloading non-core assets in a hurry to raise capital. STORY


    • WatchMe



  • CNBC on growth and inflation: The world's fastest growing countries host the world's worst-performing stock markets because they exhibit such high inflation, Mark Matthews, chief Asia strategist at Merrill Lynch (MER), said. VIDEO


  • Forbes on gold: Frank Holmes, a fund manager at U.S. Global Investors, recommends buying gold to hedge against the declining value of the dollar. VIDEO


  • Modern Marvels: A look at the history of coin-operated machines. HIST, 9 p.m.


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