A rising dollar and falling oil and gold prices made investors jittery yesterday, sending the Dow Jones industrial average tumbling more than 100 points. Fitch's downgrade of Greece's credit rating, a $3.65 billion first half loss at Dubai World's Nakheel, and a 1.8% October drop in German industrial output also weighed on sentiments.
The US dollar rose to one-month high against the euro, rising 0.9% to 76.21 against a basket of foreign currencies. Meanwhile, US Treasuries also lured investors, with the price on the 10-year gaining 11/32, and the corresponding yield dropping to 3.39%. Gold prices continued their downward journey, falling 1.8% to $1142.80.
The Dow Jones industrial average tumbled 104 points, or 1%. The broader S&P 500 index lost 11 points, or 1%. The Nasdaq composite retreated 17 points, or 0.8%. Market breadth was negative. On the New York Stock Exchange, declining issues beat those that advanced two-to-one on volume of 1.18 billion shares.
Individual company reports however continued to paint a not-so-rosy picture. McDonald's (NYSE:MCD) reported global same-store-sales rose only 0.7% in November, with domestic sales down 0.7%. Shares in McDonald’s fell 2.1%. 3M (NYSE:MMM) fell 1.0% after providing a lower-than-expected guidance. Kroger (NYSE:KR) plunged 11.9% after it reported third quarter earnings below estimates and lowered its guidance for 2010 to $1.60 to $1.70. PepsiCo (NYSE:PEP) shares fell 1.2% after the firm lowered the top end of its earnings and revenue forecast due to soft North American drink sales. JP Morgan (NYSE:JPM) said it sees additional losses on home loans and credit card delinquencies next year. Also, banking analyst Meredith Whitney cautioned consumers are "getting kicked out of the financial system" by tight credit markets.
Losses were broad based in yesterday's trading. On the DJIA twenty-nine of the thirty components fell. Of the NASDAQ's 100, only twenty-two firms managed to end in the green, sending it 0.8% lower to 2,173. On the S&P500, 406 company shares declined, taking the index to 1,092, for a 1.0% drop. All the S&P500 ended in the red yesterday. Leading the list of losers were oil and gas (-1.8%), basic materials (-1.8%), industrials (-1.3%), consumer goods (-1.0%) and consumer services (-1.0).
On the positive side, Texas Instruments (NYSE:TXN) raised its fourth-quarter earnings outlook and raised the bottom-end of its previous revenue estimate; however, the shares fell 1.1% as the raised guidance still came in below expectations. Goldman Sachs' (NYSE:GS) strategists also offered optimism for an extension of the S&P500's 61% off-its-low rally, projecting a 13% gain to 1,250 by 2010 yearend.
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