Rattled Markets Continue Sell Off for Second Day: Stocks ended Thursday with big losses, as the major indexes each lopped off about 2 percent, driven lower by comments by the Federal Reserve that it may soon begin winding down its bond-buying program.
The Dow Jones industrial average (^DJI) is down 354 points, its worst one-day slide of the year, and biggest percentage drop since November 2011. The S&P 500 (^GSPC) lost 41 -- its biggest drop since 2011 -- and the Nasdaq (^IXIC) sank 79. In addition to fears about the Fed's plan to scale back its stimulus plan, investors were also shaken by data showing China's economy is slowing. A survey of factories showed activity slumping to a nine-month low as demand weakened.
Concerns about the end of the Fed's stimulus efforts prompted selling in the bond markets, sending interest rates up, to a two-year record. Commodities suffered steep losses as well, with gold prices falling by 7 percent, silver by 9, and copper by 3. Light sweet crude oil prices dropped by 3 percent, and natural gas lost 2.
Here's a roundup of other items that made business news Thursday:
Amid the broad market sell-off, shares of US Airways (LCC) lost almost 2 percent. A government review, released Wednesday, found that the planned merger of American Airlines and US Airways would result in a greater loss of airline competition than the 2010 merger of United Airlines (UAL) and Continental Airlines.
Kroger (KR) raised its outlook for the year after the country's largest traditional supermarket chain reported a fiscal first-quarter profit that beat Wall Street expectations.
Rite Aid (RAD) notched its third-straight quarterly profit, as generic drugs and expense reductions continued to help the nation's third largest drugstore chain.
Pier 1 Imports (PIR) first-quarter net income rose 14 percent, buoyed by strong full-priced selling of its home decor items.
Sales of previously owned homes rose to a 3½-year high in May, according to the National Association of Realtors. The group said that existing home sales advanced 4.2 percent to an annual rate of 5.18 million units, the highest level since November 2009, when a home-buyer tax credit was expiring.
The number of Americans filing new claims for unemployment benefits rose more than expected last week, but not enough to signal a material shift from the recent pace of moderate job growth. Initial claims for state unemployment benefits increased 18,000 to a seasonally adjusted 354,000, while analysts had forecast the number to rise to 340,000.
Looking ahead to Friday:
CarMax Group (KMX) and Darden Restaurants (DRI) are both scheduled to report earnings before the opening of U.S. markets. Darden, which operates Olive Garden and Red Lobster chains, has suffered from a slowdown in foot traffic, as budget conscious consumers have turned to fast-food chains such as Panera Bread (PNRA) and Chipotle Mexican Grill (CMX) that offer quality food at lower prices. Analysts expect Darden to earn a profit of $1.04 a share on revenue of $2.27 billion in its fiscal fourth quarter. That compares with per-share earnings during the same quarter last year of $1.15.
No economic reports are scheduled for the day, but Friday is a quadruple witching day -- the quarterly expiration of stock and index options, as well as stock and index futures. As CNBC reports, though, it's no longer the big deal on Wall Street that it once was.
Compiled from staff and wire reports.
The 20 Most Valuable Brands In The World
Closing Bell: Markets Tumble on Fears of Higher Interest Rates
Brand Value: $27.8 billion
Percent Change v. 2012: 34%
What Happened: MasterCard's rank flew up nine spots this year to the 20th most valuable brand in the world, and Millward Brown VP Oscar Yuan attributes that ascent to "the growth of mobile technology." As consumers up their online shopping habits, brands like Mastercard and Visa reap the rewards for offering noncash payment methods.
Brand Value: $34.36 billion
Percent Change v. 2012: 34%
What Happened: "They're really into the big data," Yuan explained of the German tech brand, "So [the increase in value] is reflective of a consistent storyline: The growth of mobile shopping." SAP has the big data solutions enterprise companies need.
Brand Value: $36.2 billion
Percent Change v. 2012: 5%
What Happened: Walmart, however, has mastered the art of brick and mortar shopping. "You can't buy milk online," Yuan said. The retail giant has a large and loyal consumer base that is constantly growing - even internationally.
Brand Value: $39.7
Percent Change v. 2012: -8%
What Happened: Vodafone's 8% drop in value can be attributed to O2 and Orange's recent success. But at almost $40 billion, it is still one of the largest mobile carriers in the UK.
Brand Value: $41.1 billion
Percent Change v. 2012: -1%
What Happened: While Americans might have never heard of the Industrial & Commercial Bank of China, Yuan explains that in its home country, "the logo is ubiquitous." ICBC is the first of two Chinese brands in the top 20, a number which is largely due to the countries growing middle class.
Brand Value: $42.7 billion
Percent Change v. 2012: 15%
What Happened: "I think a lot of the growth is really tied to several consumer trends - and I'm talking about the need for consumers to shop online mobile devices," Yuan told BI. Consumers need to get the products they bought on the internet somehow, and that's where UPS comes in.
Brand Value: $45.7 billion
Percent Change v. 2012: 34%
What Happened: It's almost impossible for brick and mortar shops to compete with Amazon's wide selection, low prices, and mastery of the mobile marketplace - easily allowing consumers to buy anything from anywhere on their phone or tablet. Recent acquisitions of Audible.com and Goodreads also show the company's determination to dominate all aspects of mobile book consumption and sharing.
"There's no stopping amazon as they go international," Yuan said."
Brand Value: $47.7 billion
Percent Change v. 2012: 20%
What Happened: After acquiring Wachovia in 2008, Wells Fargo successfully expanded from a California-based bank to a national name. Coming from California also helped Well's Fargo's image with consumers considering that it was one of the few banks to remain unscathed during the financial crisis. "It also started a major rebranding strategy expansion," Yuan said.
Brand Value: $53 billion
Percent Change v. 2012: 8%
What Happened: Verizon got a boost after Apple opened its services to carriers other than just AT&T. While Verizon and AT&T's rivalry heats up, Yuan predicts that the competition will up both brands' game. "As data devices continues to proliferate, we will continue to see Verizon do well," he said.
Brand Value: $55.3 billion
Percent Change v. 2012: 21%
What Happened: "GE ... continued to be one of the most well respected consumer and industrial brands in the world," Yuan said. And the public is starting to see that it makes more than just light bulbs. General Electric has dedicated major marketing dollars to making sure that consumers know it produces everything from airplane engines to wind turbines to medical equipment. Hammering in its dedication to innovation, a recent ad campaign even enlisted the help of famous robots.
"In terms of B2B, GE is one of the most well respected brands," Yuan continued, citing that it was often used in business school case studies.
Brand Value: $55.4 billion
Percent Change v. 2012: 18%
What Happened: China Mobile is the largest mobile carrier and brand in China, so it's a no-brainer that it's one of the most valuable brands in the world. "There are more mobile phone subscribers in China than in the U.S.," Yuan said.
Brand Value: $56 billion
Percent Change v. 2012: 46%
What Happened: A key way to bolster global presence is to sponsor the Olympics. But that's not the only thing that upped Visa's brand value so drastically. As one of the most trusted names in non-cash payments, Visa has gained clout in the world of online shopping and mobile payments.
Brand Value: $69.4 billion
Percent Change v. 2012: -6%
What Happened: Marlboro is a top 10 regular, which goes to show that even though smoking is restricted in the U.S. doesn't mean that the rest of the world has laid off the habit. "Marlboro has consistently invested in the brand ever since its inception," Yuan said. "The rugged cowboy is very strong and consistent globally."
To put it another way, "about 25% of world's population are smokers, and they use it 5 to 10 times a day. I don't drink 10 bottles of water a day." That's getting your brand out there.
Brand Value: $69.8 billion
Percent Change v. 2012: -9%
What Happened: As a $70 billion brand, Microsoft is in great shape even in spite of a 9% value decrease. Microsoft is a powerhouse and has a reputation as one of the strongest tech brands in the business. But, Yuan notes, "with consumers, there's confusion as to where Microsoft fits." The company's fortune is largely tied with the PC business, but it has emerged on the mobile scene with the Surface and other devices. The company went through a major rebranding in the summer of 2012 to stay relevant.
Brand Value: $75.5 billion
Percent Change v. 2012: 10%
What Happened: AT&T is another company to gain value due to the increasing U.S. consumption of mobile products. For a long time, the service provider had an exclusive deal with the iPhone, so it became synonymous with the new technology. What's really interesting, however, is that even when Apple opened the iPhone up to Samsung and T-Mobile, AT&T's value didn't go down.
Brand Value: $78.4
Percent Change v. 2012: 6%
What Happened: "What's consistently impressive about Coca-Cola is its ability to innovate," Yuan said. "People think that soda consumption is declining, but Coke is turning the business on its head." For example, this year Coca-Cola released a series of freestyle machines which allows consumers and retailers to mix their own flavors of the soda syrup to make their own individual Coca-Cola. The company is constantly innovating and staying fresh.
Brand Value: $90.3 billion
Percent Change v. 2012: -5%
What Happened: Yuan noted that one of McDonald's gifts was the ability to listen to consumers' sentiments and adapt, particularly to growing health concerns. "It has come out with a much healthier menu with apple slices, oatmeal, and a Chicken McWrap which has done well," he said.
McDonald's is also gaining a stronghold in the coffee space, which should be an interesting new endeavor to follow.
Brand Value: $112.5 billion
Percent Change v. 2012: -3%
What Happened: At $112.5 billion, IBM's three percent value decrease is not a substantial figure. IBM is known as a company that consistently delivers year after year, Yuan told BI. And it is particularly hailed in the B2B sphere.
Yuan also noted that its Ogilvy-made "Smarter Planet" campaign, in which the company explained its plans to help clients innovate and make the world a better place, inspired consumers to believe in the brand.
Brand Value: $113.7 billion
Percent Change v. 2012: 5%
What Happened: Google has effectively taught consumers that it is more than just a search-based company. With maps, mail, shopping, and more, Google is integrated into everyone's lives. The company also made recent headlines about its new contribution to the hardware world in the form of Google Glass. "It will be interesting to see how Google Glass will contribute to the brand value, but now it's too soon to tell," Yuan said.
Brand Value: $185 billion
Percent Change v. 2012: 1%
What Happened: In spite of harsh Wall Street analysis and media speculation regarding Tim Cook's leadership capabilities, Apple continues to be a strong brand in the eyes of consumers - a major value measurement for Millward Brown. "Despite what the press says and stock market says," Yuan noted, "Apple in the eyes of the consumers is the gold standard."
In the last eight years, Apple's value has increased 1,045% - only topped by Subway's meteoric 5,145% rise. (Although Subway still hasn't broken the top 20.)
Those companies are constantly innovating to stay on the top.[Those companies are constantly innovating to stay on the top.]The gay pride Oreo, from Kraft's Facebook page.