There's No Business Like FOX Business
It may be Cinco de Mayo but for the second day in a row, all eyes on Wall Street were glued to the growing crisis in Greece.
Wall Street’s slump deepened on Wednesday as the euro plunged to 14-month lows in the wake of civil unrest in Greece that cast further doubt on Europe’s ability to put out its debt fire.
Today’s Markets
The Dow Jones Industrial Average fell 59.94 points, or 0.55%, to 10868.83, the Standard & Poor's 500 dropped 7.73 points, or 0.66%, to 1165.87 and the Nasdaq Composite lost 21.96 points, or 0.91%, to 2402.29. The FOX 50 sank 4.99 points, or 0.58%, to 852.35.
A midday comeback from the bulls proved to be short-lived as U.S. markets closed solidly lower, putting the Dow’s two-day loss total at 285 points. Hurt by the surging dollar and global economic worries, crude oil plunged below the $80-a-barrel threshold.
Just a day after global markets plummeted on the continent’s debt woes, protests in Greece killed at least three people, fueling more fears about whether a $146 billion bailout of Athens will quell the panic. Contagion fears were also bolstered by Moody's, which warned it may downgrade Portugal’s debt.
The violence in Greece “plays into market anxiety that either Europe will lose its will to support Greece (i.e., seek an orderly restructuring) and/or Greece may lose its will to implement the austerity measures in the midst of a serious economic downturn and rising social unrest,” Win Thin, senior currency strategist at Brown Brothers Harriman, wrote in a note.
The Dow closed at its lowest level since March 31 and was led lower by American Express (AXP), Walt Disney (DIS) and General Electric (GE). The index's best performers were Travelers (TRV) and Wal-Mart (WMT).
The Nasdaq Composite suffered much steeper losses than the broader markets for the second day in a row. The index has tumbled 3.86% over the past two days, its steepest two-day slump since Aug. 2009.
This week's turbulence has some wondering whether or not Wall Street will finally see its first 10% pullback since the bear-market low in March 2009. The bears remain cautiously hopeful a serious correction is in store, while the bulls point to upbeat U.S. economic and earnings headlines.
“The fundamental backdrop is pretty strong,” said Art Hogan, chief market strategist at Jefferies & Co., saying U.S. markets will “probably not” suffer a steep pullback. “The problem is, if everyone believes we are looking for [a serious pullback], it generally doesn’t happen, at least not to the extent we were looking for.”
It's clear Wall Street continues to be rattled by the crisis in Europe. Greek protests raised fears that Athens won’t be able to make the painful budget cuts needed to receive its $146 billion bailout and get its debt under control. Unions have shut down Greek airports and other businesses, further hurting its economy and market sentiment.
Additionally, the Moody's warning renewed worries that the European Union/International Monetary Fund rescue of Greece won’t be able to prevent the crisis from spreading to Portugal, Spain and other heavily-indebted countries. Hurt by the sovereign debt issues, the euro continued its steep descent, sliding another 1% to as low as $1.2805 -- its lowest level since March 2009.
The stronger greenback tends to hurt commodities and multinationals because it makes exports more expensive. Crude dove $2.77 a barrel, or 3.35%, to settle at $79.97 -- its lowest close since March 15. Gold gained $6.00 a troy ounce, or 0.51%, to $1174.60.
Normally the markets would be completely focused during the first week of the month on the U.S. labor picture, given that Friday’s jobs report is looming. However, Wall Street had little reaction to a new ADP private-sector jobs report that showed the economy created 32,000 jobs last month, narrowly beating expectations for 30,000.
Economists expect the Labor Department’s monthly jobs report will reveal the U.S. created 187,000 jobs in April but the unemployment rate remained steady at 9.7%. U.S. stocks also had a muted reaction to the new Institute for Supply Management service-sector index, which was unchanged in April at 55.4. Economists had forecasted a slight rise.
Corporate Movers
Time Warner (TWX) beat the Street and posted its best quarterly profit in the company’s history. The media giant earned 61 cents on a non-GAAP basis, compared to estimates for 48 cents. Revenue rose by an in-line 5.4% and Time Warner upped its guidance, now saying it sees 2010 EPS growing by “at least the mid-teens.”
Pulte (PHM) slashed its first-quarter loss to just 3 cents a share, vastly exceeding expectations for a loss of 22 cents. The No. 1 U.S. home builder’s revenue surged 75% to $1.02 billion, missing the Street’s view. Pulte predicted it will be profitable for the full year.
BP (BP), the owner of the leaking well in the Gulf of Mexico, said it has been able to close the smallest of the three leaks. However, the oil major said the move is expected to have little effect on the overall rate of gushing oil out of the well.
The Washington Post Co. (WPO) officially hung a “For Sale” sign outside Newsweek , saying the news magazine’s losses have become too much for the media company to handle. Newsweek has lost money every year since 2007 and is expected to be in the red once again this year.
Global Markets
The U.K.'s FTSE 100 fell 1.28% to 5341.93, France's CAC 40 closed down 1.44% to 3636.03 and Germany's DAX slid 0.81% to 5958.45
In Asia, Hong Kong's Hang Seng dropped 2.1% to 20327.54 while China's Shanghai Composite rose 0.77% to 2857.15. Japan remained closed for a holiday.
Dow Rises 143 as Bulls Feast on Strong Data, M&AGaylord’s stock takes a bounce higher this morning on Wall Street
