Bear Attack: Economic Data, Ford Pull Stocks Down

The bears violently took control of stocks on Thursday, gouging a nearly 300-point chunk out of the Dow by late trading, after negative economic data and bad earnings from the likes of industrial giants like Ford provided little impetus for stock traders to hold their positions.

Today’s Markets

At the 4 p.m. close in New York, the Dow Jones Industrial Average fell 283.11 points, or 2.43% to 11349.28. The Standard & Poor’s 500 index dropped 29.62 points, or 2.31%, to 1252.57 while the Nasdaq Composite Index fell 45.77 points, or 1.97%, to 2280.11. The consumer-friendly FOX 50 fell 20.34 points, or 2.23%, to 889.81.

Stocks trended downward throughout the day, but selling accelerated in the last hour of trading. 

"What happened to that good feeling everyone had only a day ago?," said New York Stock Exchange trader Alan Valdes. 

The biggest part of the sell off was found in the usually story of the financials. Dow components JPMorgan Chase (JPM), Citigroup (C), and American International Group (AIG) were all down more than 5% apiece. The industrials like General Motors (GM), Boeing (BA) and Ford (F) were also all down double digits as well. 

The only positive notes in the Dow were two pharmaceuticals Johnson & Johnson (JNJ) and Merck (MRK). Another bright spot were shares of Minnesota-based conglomerate 3M (MMM). The company, which is known for its Post-Its and Scotch Tape, reported it earned am adjusted profit rose to $991 million, or $1.39 a share. Analysts polled by Thomson Reuters expected earnings of $1.35 a share. 

The economic news was the primarily engine for traders to sell their positions. The U.S. Labor Department reported weekly initial jobless claims jumped last week to 406,000 -- a rise of more than 30,000 people from the week prior. Economists interviewed by Thomson Reuters had expected jobless claims would rise 14,000. 

"Those numbers get people nervous," said New York Stock Exchange trader Alan Valdes.

It's one of the few times that weekly jobless claims, which indicate the number of people applying for unemployment benefits, have risen above the critical 400,000 level. Continuing claims, which indicate the number of people who have remained on unemployment benefits for more than four weeks, fell slightly to 3.107 million people. 

The beleaguered housing market had nothing to positive to say either. The National Association of Realtors said existing home sales slid to a 4.86 million annual rate in June, a 2.6% decrease from May. The median nationwide home price dropped to $215,100 in June, down 6.1% from $229,000 in June 2007. The nationwide inventory of homes increased to an 11.1-month supply.

The commodities market didn't have anything to add to stocks either. Oil, which had been on a considerable downward trend for more than a week, rebounded 91 cents to $125.35 a barrel in New York-based trading. Gold gained $4.50 at $927.20.

Ford’s Big Loss

One of the biggest drags on the market was the release of the earnings of Detroit automaker Ford Motor Co. (F). The car maker said it lost $8.7 billion in the second quarter, or $3.88 per share, compared with net profit of $750 million, or 31 cents per share, in the same quarter a year ago.

The loss included a $8 billion writeoff of North American assets and Ford Credit's finance portfolio. Excluding those one time items, Ford lost 62 cents per share. Analysts interviewed by Thomson Reuters, expected a 27 cent loss per share.

Ford's second-quarter revenue came in at $38.6 billion, down $5.6 billion from the year-ago period. Analysts expected $34.6 billion.

Both Ford and General Motors have suffered this year after planning to sell more trucks and sport utility vehicles than consumers were planning to purchase. Ford shares are down 10% year to date, while GM stock is down more than 40%.

Company Movers

Southwest Airlines (LUV), the only airline who isn't suffering from high fuel prices, reported a profit of $321 million, or 44 cents a share, up from $278 million, or 36 cents a share, a year ago. Excluding impact from fuel contracts, Southwest posted a profit of 6 cents a share. Revenue rose 11% to $2.87 billion. Analysts polled by Thomson Reuters were expecting per-share earnings of 12 cents on revenue of $2.86 billion.

Amazon.com (AMZN) posted a profit of $158 million, or 37 cents a share, compared with $78 million, or 19 cents a share, a year earlier. Analysts were expecting earnings of 29 cents a share.

Dow Chemical (DOW) reported a second-quarter profit of $762 million, or 81 cents a share, compared with $1.04 billion, or $1.07 a share, in the prior year. Revenue rose 23% to $16.38 billion, helped by the average 18% increase in prices. The mean estimates for analysts polled by Thomson Reuters were for earnings of 85 cents a share. Dow's earnings were primarily hurt by the rising cost of oil, which the company relies on to make the products it produces.

Beleaguered regional bank National City Corp. (NCC) posted a  loss of $1.76 billion this quarter, compared with a profit of $347 million, or 60 cents a share, from a year ago. The company wrote down $1.1 billion in assets as part of the loss. The estimate of analysts polled by Thomson Reuters was for a per-share loss of 26 cents.

Qualcomm (QCOM) and Nokia (NOK) said they would end their multi-year patent dispute in a contract signed today. As part of the agreement, Nokia will pay Qualcomm for royalties going back to 2001. 

Pharmaceutical company Eli Illy (LLY) said it had a quarterly profit of 99 cents a share, one cent short of the $1 estimated expected by analysts interviewed by Thomson Reuters. Revenue, however, was $5.15 billion topping estimates of $5.03 billion.

The Federal Communications Commission said an "agreement in principle has been reached" on the merger of XM Radio (XMSR) and Sirius (SIRI) and a vote to approve the merger to happen as early as today, The Wall Street Journal reported. As part of the merger, the joint company will pay about $20 million in fines, the Journal said.

Microsoft (MSFT) said Thursday in an conference for investors that they are "done" with Yahoo! (YHOO) currently, but doesn't rule out talks in the future. 

World Markets

The Dow Jones Euro Stoxx 50 Index, a gauge of the 50 biggest companies in Europe, fell 17.5 points, or 0.52%, to 3370. The FTSE 100, London's benchmark index, fell 42.60 points, or 0.78%, to 5407.30.

On the continent, Paris' CAC 40 dropped 34.07 points, or 0.77%, to 4374.67, while Germany's DAX fell 73.36 points, or 1.12%, to 6462.73.

In Asia, Hong Kong's Hang Seng fell 46.83 points, or 0.2%, to 22087.72. The Nikkei 225 gained 290.38 points to 13603.31.

Economic Data Dump

The average rate for a 30-year fixed-rate mortgage jumped to 6.63% for the week ending July 24, 2008 -- the highest since July 2007 -- from 6.26 percent one week earlier, Freddie Mac (FRE) reported today in its weekly mortgage rate survey. Last year at this time, the 30-year FRM averaged 6.69 percent The week-to-week increase is the largest since October 1998.