Draghi Drags Down the Dow: Thursday’s IP Market Recap

by Marc Bastow | August 2, 2012 5:08 pm

Draghi Drags Down the Dow: Thursday’s IP Market Recap

IPMarketRecap Draghi Drags Down the Dow: Thursday's IP Market Recap[1]Take one part Ben Bernanke, who on Wednesday announced that the U.S. Fed wouldn’t take any new action to spur the U.S. economy, add a dash of today’s announcement by European Central Banking committee head Mario Draghi that the ECB has no real plan to resolve the European crises, and you get the ingredients for a very bad-tasting drink.

Which is exactly what U.S. markets got just two hours into Thursday’s session as the Dow quickly slipped down 87 points (0.7%) on the way to a loss over the remainder of the day, including at one point a 122-point tumble, dragging all indexes down with it despite a mild late-afternoon rally.

For the day the Dow dropped 0.71% to end at 12,879, while the S&P fell 0.75% to 1,365, and the Nasdaq lost 0.36% to finish at 2,910.

As seems to be the case during earnings season, corporate results are driving both individual stocks and sectors almost as much as glum economic news, which included a mildly disappointing report from the Department of Labor indicating the number of people filing unemployment claims rose.

Despite upbeat news from the International Council of Shopping Centers, which reported an increase in U.S. store sales[2] that topped Wall Street expectations, several retailers took a hit on earnings news. Abercrombie & Fitch (NYSE:ANF[3]) toppled nearly 15% after providing quarterly guidance numbers below Street expectations[4]. The news took down American Eagle (NYSE:AEO[5]) and Urban Outfitters (NASDAQ:URBN[6]) over 2% on the day, despite AEO’s recent upbeat look at future earnings. Gap Stores (NYSE:GAP[7]) managed to buck the trend by climbing nearly 13% for the day on the strength of strong July same-store sales.

Knight Capital Group’s (NYSE:KCG[8]) stock plunged 50% after the company said it would report a[9] $440 million pretax loss due to a “technology issue” at the trading firm Wednesday that led to a wave of trading errors and mistakes[10].

Consumer electronics maker Sony (NYSE:SNE[11]) saw its shares take a beating after announcing a wider-than-expected loss[12] in its fiscal first quarter, which it blamed on eroding margins due to unfavorable exchange rates. Sony shares finished the day down over 7%.

Green Mountain Coffee Roasters (NASDAQ:GMCR[13]) shares rallied 26% despite barely beating bottom-line earnings forecasts[14] and cutting its remaining-year sales forecast. The company announced plans to buy back $500 million in shares, perhaps a good bargain since the price is down by 50% since the beginning of the year.

Shares of First Solar (NASDAQ:FSLR[15]) also rallied, gaining just over 21% after posting an 82% jump in second-quarter profit and raising its guidance for the remainder of the year. First Solar stock has fallen 90% over the last 52-week period, and a short-selling squeeze[16] may have caught investors napping.

Finally, beleaguered Facebook (NASDAQ:FB[17]) stared a sub-$20 per share price straight in the eyes before a late rally brought the stock to a close at just over that level, but still a 4% loss. Shares are now down nearly 48% from the IPO.

A short day for earnings tomorrow includes Dependable Dividend Stock[18] Proctor & Gamble (NYSE:PG[19]), along with notables Madison Square Garden (NASDAQ:MSG[20]) and Pepco (NYSE:POM[21]), bringing up the rear after the bell.

Three Up

Three Down

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he does not hold a position in any of the aforementioned securities.

Endnotes:
  1. [Image]: http://investorplace.com/hot-topics/investorplace-market-recap/
  2. reported an increase in U.S. store sales: http://investorplace.com/2012/08/retail-sales-beat-forecasts-in-july/
  3. ANF: http://studio-5.financialcontent.com/investplace/quote?Symbol=ANF
  4. providing quarterly guidance numbers below Street expectations: http://investorplace.com/2012/08/abercrombie-fitch-shares-plunge-on-weak-q2-outlook/
  5. AEO: http://studio-5.financialcontent.com/investplace/quote?Symbol=AEO
  6. URBN: http://studio-5.financialcontent.com/investplace/quote?Symbol=URBN
  7. GAP: http://studio-5.financialcontent.com/investplace/quote?Symbol=GAP
  8. KCG: http://studio-5.financialcontent.com/investplace/quote?Symbol=KCG
  9. the company said it would report a: http://investorplace.com/2012/08/mom-and-pop-investors-shrug-at-knight-capital-fiasco/
  10. a wave of trading errors and mistakes: http://investorplace.com/2012/08/trading-glitch-sends-stocks-scrambling/
  11. SNE: http://studio-5.financialcontent.com/investplace/quote?Symbol=SNE
  12. after announcing a wider-than-expected loss: http://investorplace.com/2012/08/sony-q1-loss-widens-shares-tumble/
  13. GMCR: http://studio-5.financialcontent.com/investplace/quote?Symbol=GMCR
  14. despite barely beating bottom-line earnings forecasts: http://investorplace.com/2012/08/green-mountain-cuts-outlook-plans-buyback/
  15. FSLR: http://studio-5.financialcontent.com/investplace/quote?Symbol=FSLR
  16. and a short-selling squeeze: http://investorplace.com/2012/08/first-solar-burns-bright-on-short-squeeze-fslr/
  17. FB: http://studio-5.financialcontent.com/investplace/quote?Symbol=FB
  18. Dependable Dividend Stock: http://investorplace.com/dividend-paying-stocks/
  19. PG: http://studio-5.financialcontent.com/investplace/quote?Symbol=PG
  20. MSG: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSG
  21. POM: http://studio-5.financialcontent.com/investplace/quote?Symbol=POM
  22. OMC: http://studio-5.financialcontent.com/investplace/quote?Symbol=OMC
  23. YELP: http://studio-5.financialcontent.com/investplace/quote?Symbol=YELP
  24. Read more here: http://investorplace.com/ipo-playbook/yelp-bucks-the-social-massacre/
  25. CAR: http://studio-5.financialcontent.com/investplace/quote?Symbol=CAR
  26. SEE: http://studio-5.financialcontent.com/investplace/quote?Symbol=SEE
  27. NAV: http://studio-5.financialcontent.com/investplace/quote?Symbol=NAV
  28. BMY: http://studio-5.financialcontent.com/investplace/quote?Symbol=BMY

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