QE3 Fever Fades: Stocks Retreat for Fifth Day

By

Published September 26, 2012

| FOXBusiness

FOX Business: The Power to Prosper

The S&P 500 tumbled below QE3 levels and suffered its first five-day slide since mid-July on Wednesday as enthusiasm for central bank stimulus actions continue to be stunted by troubles in Europe and sinking tech stocks.

Today’s Markets

The Dow Jones Industrial Average dropped 44.04 points, or 0.33%, to 13413.51, the S&P 500 lost 8.27 points, or 0.57%, to 1433.32 and the Nasdaq Composite declined 24.03 points, or 0.77%, to 3093.70. The FOX 50 dipped 5.78 points, or 0.53%, to 1085.51.

Wall Street failed to rebound from Tuesday's 101-point tumble, the Dow's worst performance in nearly a month.

Wednesday's declines began overseas as Asian markets tumbled overnight and Europe suffered steep selling amid deteriorating market sentiment about the never-ending sovereign debt debacle.

“I think part of a realization that we’ve got some band-aids on this European situation but we’re not anywhere near a solution on this thing,” said Scott Wren, senior equity strategist at Wells Fargo’s (WFC) Wells Fargo Advisors.

Sentiment was hurt on Wednesday by television images showing clashes between police and an estimated 200,000 protestors in Greece, which grappled with its first general strike since the new coalition government was formed back in June. Riots broke out overnight in Spain as well over new austerity measures there.  

European markets have also been hit by jitters ahead of the looming Spanish bank stress tests and budget announcement on Friday. 

Interestingly, the S&P 500 landed on Wednesday below 1436.56, the closing level on the day before the Federal Reserve officially kicked off QE3, its third round of quantitative easing..

“We’ve had a great rally. Complacency really took hold going into the central bank moves of the last few weeks. Now we’re seeing some of it unwind on recognition that we still have problems here and in Europe,” said Nicholas Colas, chief market strategist at ConvergEx.

Wren said he’s been looking for a healthy pullback given the 15% surge for the S&P 500 from the June lows until the recent highs. The decline of the last week have left the index just 3% off its 2012 highs.

Most of the Dow's 30 stocks closed in the red, led by American Express (AXP) and Walt Disney (DIS). The index's best performers were Hewlett-Packard (HPQ) and Boeing (BA). 

A day after its worst decline since July 20, the Nasdaq Composite experienced selling again, driven lower by another decline for Apple (AAPL) and other tech stocks like Oracle (ORCL). Apple has disappointed investors by saying it sold 5 million iPhones last weekend, which badly missed some estimates on Wall Street.

On the economic front, home builders like Lennar (LEN) and KB Home (KBH) slumped after the Commerce Department said new home sales dipped 0.3% in August to a rate of 373,000 units, missing forecasts for a rise to a pace of 380,000 units. On the other hand, July new home sales were raised slightly at August median new home prices posted their biggest gain in nearly eight years to $256,900 -- the highest level since March 2007. 

In the commodities complex, crude oil slipped below $90 a barrel for the first time since August 3 even after new data showed crude oil stockpiles tumbled by 2.45 million barrels last week, more than double forecasts. Crude slid $1.39 a barrel, or 1.52%, to $89.98. Gold lost $13.20, or 0.75%, to $1,750.60.

Corporate Movers

American Greetings (AM) rallied 17% after the card company disclosed receiving a $580 million go-private offer from a group led by CEO Zev Weiss and his family. The bid is worth $17.18 a share, marking nearly a 20% premium on the company's Tuesday close.

RadioShack (RSH) announced the exit of CEO James Gooch, prompting the embattled electronics retailer to kick off a search for a new leader. RadioShack tapped CFO Dorvin Lively to take over on an interim basis.

Jabil Circuit (JBL) tumbled 10% a day after the contract manufacturer logged a weaker-than-expected fiscal fourth-quarter profit and posted a disappointing outlook for the current quarter. 

Dollar Thrifty (DTG) reached the conclusion of its “go-shop” period late Wednesday night without finding another suitor, paving the way for shareholders to vote on the car rental company’s approximately $2.6 billion buyout from larger rival Hertz (HTZ).

Global Markets

The Euro Stoxx 50 tumbled 2.72% to 2498.52, London’s FTSE 100 retreated 1.56% to 5768.09 and the German DAX dropped 2.00% to 7276.51.

In Asia, Hong Kong’s Hang Seng slid 0.83% to 20527.73 and the Japanese Nikkei 225 plunged 2.03% to 8906.70.

URL

http://www.foxbusiness.com/markets/2012/09/26/qe3-fever-fades-stocks-retreat-for-fifth-day/