Market Wrap: Stocks Drop on Global Economy, Earnings Concern

Dow Jones Industrials Average Falls Sharply
Andrew Burton via Getty Images
By Caroline Valetkevitch

NEW YORK -- U.S. stocks fell for a fifth straight session Thursday as bank results disappointed and investors fretted over the potential impact of global economic weakness on U.S. earnings.

Energy shares extended recent losses as oil prices settled down more than 4 percent after weak U.S. economic data spurred worries over oil demand. The S&P energy index fell 1.2 percent.

%VIRTUAL-pullquote-We're probably going to see slowing in the global economy, and it will be very difficult to sail through a global recession without getting touched.%"We're probably going to see slowing in the global economy, and it will be very difficult to sail through a global recession without getting touched," said Scott Colyer, chief executive officer of Advisors Asset Management in Monument, Colorado.

Suggesting further weakness may be ahead, the S&P 500 index closed below its 120-day moving average and ended for the first time in a month below the 2,000 mark, considered a psychological support level. The CBOE Volatility index notched a fifth day of gains, up 4.2 percent at 22.39.

Expectations for U.S. fourth-quarter earnings have been scaled back sharply, with growth now estimated at 3.5 percent, compared with an Oct. 1 estimate of 11.2 percent, according to Thomson Reuters data.

The S&P financial sector dropped 1.3 percent. Bank of America (BAC) lost 5.2 percent to $15.20, among the S&P 500's biggest drags, after the second-largest U.S. bank by assets reported a 14 percent slump in quarterly profit. Citigroup (C) shares fell 3.7 percent to $47.23 after its results.

The Dow Jones industrial average (^DJI) fell 106.38 points, or 0.61 percent, to 17,320.71, the Standard & Poor's 500 index (^GPSC) lost 18.6 points, or 0.92 percent, to 1,992.67 and the Nasdaq composite (^IXIC) dropped 68.50 points, or 1.48 percent, to 4,570.82.

The S&P is now down 4.7 percent from its Dec. 29 record high.

Adding to volatility, the Swiss National Bank scrapped its cap on the franc currency in a surprise move.

U.S.-traded Swiss stocks climbed. Credit Suisse (CS) was up 1.8 percent at $23.22 and Novartis (NVS) jumped 3.9 percent to $100.58 as a strengthening franc made U.S.-dollar denominated stocks cheaper.

Best Buy (BBY) shares tumbled 14.1 percent to $34.30 as the worst performing S&P 500 component. The electronics retailer expects same-store sales growth to be flat to negative in the first two quarters of its fiscal year.

After the bell, shares of Intel (INTC) fell 1.1 percent to $35.80 following its results.

U.S. producer prices recorded their biggest fall in more than three years in December, while other reports showed mixed signals for manufacturing in New York state and the mid-Atlantic region in January.

About 7.9 billion shares changed hands on U.S. exchanges, above the 7.3 billion average for the last five sessions, according to BATS Global Markets.

NYSE declining issues outnumbered advancers 1,995 to 1,091, for a 1.83-to-1 ratio; on the Nasdaq, 2,152 issues fell and 603 advanced for a 3.57-to-1 ratio.

The S&P 500 posted 27 new 52-week highs and 17 new lows; the Nasdaq composite recorded 30 new highs and 134 new lows.

-With additional reporting by Ryan Vlastelica and Chuck Mikolajczak.

What to watch Friday:
  • The Labor Department releases the Consumer Price Index for December at 8:30 a.m. Eastern time.
  • The Federal Reserve reports industrial production for December at 9:15 a.m.
  • The University of Michigan releases its initial survey of consumer sentiment for January at 9:55 a.m.
These selected companies are scheduled to release quarterly financial results:
  • Goldman Sachs (GS)
  • PNC Financial Services Group (PNC)
  • SunTrust Banks (STI)
  • Charles Schwab (SCHW)
The 7 Best Things to Buy in January
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Market Wrap: Stocks Drop on Global Economy, Earnings Concern

At the end of December, gyms are mostly empty. The beginning of January turns gyms into madhouses. While it may seem smart for gyms to hike prices in the new year, they do the opposite to persuade you to join their facility versus their competitors'. In fact, says that membership fees waived by gyms in January can save you over $100.

On that same note, January is an excellent month to purchase those yoga mats, ellipticals, DVDs, treadmills, dumbbells, workout apparel and anything else that will help kick you into shape. These fitness necessities are often marked up to 70 percent off the retail price both online and in stores. Also, check out deal websites such as Groupon and Living Social for an uptick in fitness-related steals throughout January, and head to resale shops for gently used fitness equipment, especially toward the end of the month when people donate their old stuff to make room for new goods.

January is arguably the best month to buy winter clothing. For starters, retailers gear up to showcase spring apparel and, to help move product, they drop prices on those cable-knit sweaters, denim goods, scarves, boots, coats and more. Secondly, January is an excellent month to buy winter apparel because you still get plenty of wear out of whatever you buy. Note that the further into January we go, the deeper the discounts.

OK, so you don't actually buy credit cards, but you can certainly apply for a new one. In the spirit of new year's resolutions, which often include battling debt, we suggest taking advantage of the many credit card promotions this month. For example, numerous credit cards offer 0 percent annual percentage rate on balance transfers this time of year, providing you with six months to a year of interest-free debt repayment. If you have a high-interest credit card, consider transferring the balance and paying it down aggressively. Other credit card promotions include an increase in cash back and bonus miles.

Yep, it's tax season. While the thought is sure to induce a few groans, know that there are at least a few deals to be had along the way. In January through late March, you can find tax filing software for up to 50 percent off the retail price. In-person tax filing services also hold promotions, so look out for specials. We suggest signing up for emails or joining social media pages to stay in the loop on all the above.

If you have any plans to make over your home in the near future, now's the perfect time to pounce. Big retailers -- including Target (TGT), Home Depot (HD), Crate & Barrel, Sears (SHLD) and JCPenney (JCP) -- heavily discount their furniture and home goods collections in January, says The website says you can "expect to see furniture clearance sales that take between 40 percent to 75 percent off regular prices."

Philadelphia department store owner John Wannamaker started the white sale tradition in 1878 (adapted from those fashionable French). He recognized that sales dried up after the holidays and that people just didn't get out of the house and buy much during the dreary, cold months. So he ran white sales, named after the pristine snow and the products discounted. These white sales still take place to this day. Expect to find sheets, towels, curtains, napkins, and more for between 30 percent and 60 percent off the retail price.

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