Stocks surged Wednesday on the strength of solid earnings from Dow component IBM (IBM), but Big Blue's blue-chip comrade, Microsoft (MSFT), struck a very different chord today with its quarterly report. The software giant's stock plummeted to its lowest price since January 1998 after missing second-quarter profit expectations and announcing plans to eliminate 5,000 jobs. In a letter to employees, CEO Steve Ballmer admitted that "we are not immune to the effects of the economy." Microsoft's profit miss, along with a dose of dismal earnings from regional banks and some downbeat economic data, set the stage for a red ink-soaked day in the equities market.
The Dow Jones Industrial Average (DJIA 8,122.80) ended on a narrowed loss of 105 points, or 1.3%, after slipping below the 8,000 level earlier in the session. The blue-chip barometer traded in a 267-point range in today's volatile action. Only 6 of the Dow's 30 components muscled their way into positive territory, led by Kraft Foods (KFT). Microsoft and Caterpillar (CAT) paced the 24 declining issues.
The S&P 500 Index (SPX 827.50) finished on a deficit of 12.7 points, or 1.5%, after spending the day trading within the same point range it inhabited on Wednesday. Finally, the Nasdaq Composite (COMP 1,465.5) was hit the hardest, with the tech-rich index giving up 41.6 points, or 2.8%. The COMP's drop today places it on the south side of the 1,500 region once again.
Turning to equities in focus, DryShips (DRYS) plunged after suspending its dividend and offering a disappointing preview of fourth-quarter earnings ... Potash Corp. of Saskatchewan (POT) surprised the Street with stronger-than-expected earnings ... Lowe's Companies (LOW) failed to gain any positive momentum, despite an upgrade to 'buy' ... Option players are expecting major movement out of General Electric (GE) after its upcoming earnings release ... eBay (EBAY) endured a grueling session after confessing to its first-ever quarterly revenue decline ... and today's Quote of the Day comes from Heidi N. Moore of the Wall Street Journal's Deal Blog, who weighed in on the star-crossed merger of Bank of America and Merrill Lynch. After Merrill Lynch CEO John Thain was unceremoniously ousted today amid accusations of various and appalling financial indiscretions, Moore observed:
"It is official. In Bank of America's acquisition of Merrill Lynch is a candidate for the title of 'A Deal from Hell.'"
But these weren't the only headlines hitting the Street today. Click on the links below for our Daily Market Blog coverage of:
And, in case you missed it, senior equities analyst Richard Sparks stepped into the studio to offer his thoughts on the stock market. Click here to watch the video.
For today's activity in crude oil, gold futures, options, and more, turn to page 2.
Oil futures plummeted in early trading after investors learned of a larger-than-expected build in U.S. inventories. The Energy Information Administration (EIA) reported that crude stockpiles rose by 6.1 million barrels during the last week, absolutely dwarfing analysts' expectations for an increase of 1.9 million barrels. However, black gold brushed off its early decline to end the day modestly higher, with the March-dated contract gaining 12 cents to finish at $43.67 per barrel. Earlier, oil futures fell as low as $40.41 in intraday trading.
Grim news from Dow components Microsoft and Intel (INTC), along with a report that housing starts fell in December to their lowest level on record, provided support today for safe-haven gold futures. Ongoing concerns about the crippled financial sector also prompted a flight to (relative) safety among investors, despite the U.S. dollar's gains today versus the euro and the British pound. Gold for February delivery added $8.70, or 1%, to end the day at $858.80 per ounce.
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