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NEW YORK — Stocks closed with steep losses Tuesday after disappointing corporate earnings and reports that a key meeting of European financial ministers had been canceled. Assets that tend to hold their value in a weak economy like U.S. government debt and gold rose.
The Dow Jones industrial average lost 207 points. It had gained 409 points over the previous three days.
Manufacturing conglomerate 3M cut its 2011 earnings forecast, and U.S. Steel warned that demand for its products could slow. Netflix Inc. plunged 35 percent after the company cut its profit forecast and said it is losing subscribers following a price increase in July. After the market closed, Amazon Inc. plunged 17 percent after its earnings came in far below Wall Street's forecasts.
The market was also pulled lower by a report that consumer confidence plunged in October to the lowest level since March 2009. The Conference Board index measures how shoppers feel about business conditions, the job market and their outlook for the next six months.
"It's hard to parse this data and find any way that you can glean something positive about it," said Tim Speiss, vice president at EisnerAmper Wealth Planning.
The Dow fell 207 points, or 1.7 percent, to close at 11,706.62. 3M fell 6.3 percent, the largest drop among the 30 stocks that make up the Dow average.
The Standard & Poor's 500 index fell 25.14, or 2 percent, to 1,229.05. The Nasdaq dropped 61.02, or 2.3 percent, to 2,638.42. The losses turned the Nasdaq negative for the year once again. A rally Monday left the index up 1.8 percent for 2011.
Small company stocks fell far more than the broader market, a sign that investors were shunning assets perceived as being risky. The Russell 2000, an index of small companies, plunged 3 percent, reversing a gain of 3.3 percent Monday.
Prices for assets seen as stable stores of value rose. The yield on 10-year Treasury notes fell to 2.14 percent from 2.23 percent late Monday. Bond yields fall when investors send their prices higher. Gold rose 2.9 percent.
The latest headlines from Europe cast doubt over whether leaders there can agree on a comprehensive solution for the region's debt crisis in time for a summit Wednesday. Europe's ongoing debt crisis has been behind much of the market's big moves lately.
European officials are working to patch together a plan that will prevent banks from taking huge losses if the Greek government defaults on its bonds. A messy default could lead to a credit freeze-up similar to the one in 2008 following the fall of Lehman Brothers.
Anticipation of a solution to Europe's debt mess and strong profit reports from Caterpillar Inc., McDonald's Inc. and other major U.S. companies helped the S&P 500 surge 14.1 percent from Oct. 3, when it slumped to its lowest point of the year, through Monday's close. Traders warn that if European leaders fail to come up with a credible solution it could sent markets sharply lower.
United States Steel Corp. dropped 9.6 percent after the nation's largest steelmaker warned that demand for some of its products could decline in the final three months of the year if the economy slows down more.
Delta Air Lines Inc. slumped 5.2 percent after the airline reported results that missed Wall Street's expectations. Delta cut its flights 1 percent in the most recent quarter and said it would cut as much as another 5 percent during the last three months of this year.
United Parcel Service fell 2.1 percent after the company said its growth in Asia was slowing. First Solar Inc. plunged 25 percent after the company said its chief executive had stepped down.
Five stocks fell for every one that rose on the New York Stock Exchange. Volume was average at 4.3 billion shares.
CNBC's Sharon Epperson and Courtney Reagan discuss the rally's stalling Tuesday and its relationship to delays and disagreements over the solution for Europe's debt crisis.
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And folks were so optimistic on these very same issues yesterday!
What happened????
I thought that the European Crisis was getting solved!
Whoops....
There it goes...
It became the DOWN Jones, again.
Will it be up tomorrow because some businessman or banker in Europe or the United States gives us more misleading information?
Values rise and fall, and the little guys - the private citizens - continue to live on the edge because of the greedy, self-serving decisions of those in positions of power and "authority", and the lowest in the economic strata continue to suffer.
European officials are working to patch together a plan that will prevent banks from taking huge losses if the Greek government defaults on its bonds.
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Europe is a mess but like the U.S. the governments will bail the banks out even though it is the banks fault for engaging in risky investment. Instead of letting them fail like they should, the tax payers will once again be asked to bail them out. We should've let our financials go and the Europeans should do the same.
You are right, the fix is in! nobody makes money unless the market moves up - down
the market is simply playing the numbers game. its rightfull place for the dow is around 9800 to 10400 conservatively and 10400 to 10800 bullish. after that we should ignore it the same as we should ignore the housing market and the banks problems. only then will things take hold.
so lets all stop watching europe like it was the last bastion of survival and using it as a reason to overinflate the market.
Unfortunately then, we must be receiving falsehoods from other "authorities" who insist that the European situation, if not solved, will hit us here in the United States.
Perhaps it is not the "last bastion of survival", but how many will lose, go under, go into bankruptcy or on welfare, jump out of windows because Greece, or Italy, or some other country defaults?
Oops, looks like you goofed again PMSnbc! Remember my earlier note, up, down, up, down, up, down.............you got it now?
Boys, why not write nursery rimes, maybe you'll do good there and not waste our time with your insightful articles.
ARIFELIFE
Sounds like the small investor is getting screwed; “up, down, up, down, up, down…”
Happy now OWS people?
lol... tomorrow it will be up 100 and headlines will read "DOW Surges!"
The truth is that energy prices are up and the economy is let down !
Hey, at least the Europeans have agreed on one thing, they had a plan to cancel the plan, cool! Wall Street and the other trading markets have their collective, stock trading heads up their asses. The only thing this latest rally has done is give the government a "we told you the economy is recovering" attitude and cloud, no, obscure the truth. But the only ones being misled are themselves, it's almost comical, and would be funny if it didn't effect us, the average, smarter than that people. What a joke Wall Street has become! These bounces only cause inflation, speculation, and loss of jobs to the average hard working American, in fact all hard working people around the world. These wanna be sooth sayers, half assed phycics, feel they have a handle on what's happening when in reality they are nothing more than rumor mongers! They should stick to tabloids at the checkout! No faith in Wall Street!
The markets today are controlled by High Frequency Traders who now "own" some 70% of the markets. High Frequency Traders LOVE (by their own admission) a volatile market. Now that they "own" 70% of it they can almost control it. Add to that the "Derivative Markets" and you've got a stock market that is absolutely on a different planet from the system today's retirees imagine when they think of the markets. Some people are saying that the "swing up" in the markets this past week was a "false swing." What does that mean? Well, think of HFTers and how they control those swings, and then, think how much money they made doing it. We're probably going to see some wild market swings in the next few days. This is not the place to be for small investors. You're at Las Vegas playing against loaded dice! By the way, look out for the European debt crisis. It's about to collapse.
I understand and agree, but the sick comedy to all of this could cause the end. The irony to all this? It's like watching a bridge builder jump off his own bridge!
Atleast Europe doesn't have a do nothing congress. They might just borrow more money, more money and more money.
The True Blue: The U.S. economy is strongest in the world, bar none. Doesn't mean we don't have a debt crisis, but it's not anything compared to the rest of the world. Much, not all, but much of the crisis is outside politics. The world is so interdependent today that it's hard to know with any high degree of certainty what is going to happen. But, clearly, the signs are not good. Greece is troublesome enough, but the major problem is Italy. If Italy goes belly up, then that will set off a cause and effect network (causes produce effects and those effects become causes of other effects, ad infinitum across the planet) that will produce devastating results across the Europe and the world. Whether banks in Germany and to a lesser extent France and possibly the USA and China can come to the rescue to try and prevent a world-wide calamity is anyone's guess. The American Congress has no role in all of this.
T. Jefferson - That's it in a nutshell. China may throw in only because they have nothing to gain - where will they sell their slave labor produced crap? However they will be knocked down a peg or 4 and may just hunker down for the duration. Like you said - impossible to say that there in lies the issue. Uncertainty is the prime mover of the market. Someone sneezes in Europe and the market drops 300 points.
We are getting hosed: I thought maybe China might be able to help bail Italy out, but the more I learn the more I don't think they will. One can't know for certain, of course, but the Chinese infrastructure may well be too troublesome for the them to take a chance on pouring billions into the financial system in Italy and Europe. China must pour it's wealth into it's own infrastructure or risk a serious collapse internally. Then, there is the threat of internal violence in China. The Chinese government is more fearful of internal civil war and revolution than they are of external enemies. It's interesting that their military budget with a population of one billion, three hundred million people is not nearly as large as the military budget of the United States. In fact, the military budget of the USA is equal to that of the rest of the world's put together. We have an absolutely enormous military budget in this country. So, if the Chinese were to start building a military system to equal that of the USA, it would require moving enormous, enormous, amounts of monies from their domestic infrastructure commitments to the military. That, in turn, would create even more problems inside China causing much unrest among already dissatisfied groups which, in turn, would run the risk of putting people into the streets. The Chinese know they have nothing to fear from us militarily. We are not on their borders; we have no territorial interests in China; and, they know all that. They need to trade with us. In short, they're very worried about their internal problems. Therefore, it would be a serious risk for the Chinese to spread themselves too thin by getting involved in the European debt crisis. One never knows for sure, but I'd think the probabilities are not very great they would want to raise the risk of more increasing more internal problems. They are having a time managing those problems they have now.
Yeah, this sucks. I don't have time to play 'catch up' so I leave myself exposed to equities and just when I'm close to moving safer comes the week 'O plunge.
Jeez, my girlfriend took out a 20K loan, paid herself back at something like 7.5% interest and is looking like a financial genius and yes, she kept contributions to her 401 during that time. She is considering another loan. Crazy times call for crazy tactics?
Oh just think everybody was jumping up and down yesterday happy days WERE HERE AGAIN. Yeah right!
Is 11,700 bad news, Gloria?
Even get the feeling this Country's wealth is being mined by Global interests? I do.
European officials are working to patch together a plan that will prevent banks from taking huge losses if the Greek government defaults on its bonds.
================================
Europe is a mess but like the U.S. the governments will bail the banks out even though it is the banks fault for engaging in risky investment. Instead of letting them fail like they should, the tax payers will once again be asked to bail them out. We should've let our financials go and the Europeans should do the same.
up and down, up and down... why do I feel like I am being Fockered by a lymp bisquit?
Up - down, small move down, big Headlines, big deal - be up 200 tomorrow
and down 250 the next day....it has mostly been down A LOT since July/August.
derpy, I am sure a lot of people only look at where it closes, who cares what goes on during the day. My point is that it has been swinging wildly, closing to closing (and MSNbc always has some dumb headline about it.)
Not bad boys and girls but let's work on -500 tomorrow. We'll never make a 9000 DOW by Christmas at this rate.
Indeed! Never before have so many useful idiots been set loose on a task such as this one of bringing down the Western capitalist economy. I sometimes wonder how NBC was chosen to be the wayward mother of this political derivative - MSNBC. Who is it , really, that dictates the maintenance of this rabid ideology? The board of globalists at General Electric? ThinkProgress, MoveOn and the rest of the think tanks? Godheads such as Soros?
Wall street is bringing down itself, sir! Look at the daily Dow averages and see it is Wall Street greed that is leading to uncertainty. Investors lose; brokers win!
It may be the time to start an 80% tax on Short Sellers. Make it unprofitable to churn the market.
I told you folks: The stock market has become a symbol of the dysfunction and greed of capitalism. I have no idea how any system can function with confidence if one day it is buying big and the next day it is selling back what it bought. If this continues, socialism is going to start looking tempting.
THE DOW IS UP! THE DOW IS DOWN! THE DOWN SOARS! THE DOW BORES! THE DOW IS BROKE AND IT AIN'T NO JOKE!
Sharing is caring. Corporations can report record breaking profits all they want, but in the end it won't last. Until the wealth is shared with the American people, this economy will remain on the verge of total collapse. I believe in the free market system with my whole heart. I believe in low taxes and less regulation. But I believe as an American business, you have the moral responsibility and a patriotic duty to share the wealth with it's citizens and try to help build up your country.
Thank you Lisa: When We the People stop supporting the companies that treat their employees and customers with total disregard, that buy merchandise made in other countries, that give stock holders and C.E.O's millions in profits but can not (???) afford health care for the workers then eventually they too will lose THEIR jobs and money. Walmart, Bank of America and Netlix come to mind-BUT-if We the People support these companies then we have no one to blame but ourselves.