Closing Bell: Stocks Recover After Selloff, But Still End in the Red

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China slump, higher bond yields weigh on markets
Richard Drew/AP
Wall Street began the week in skittish fashion. An overnight nosedive by Chinese stocks sent shockwaves through global markets and triggered a selloff after the opening bell, sending the Dow down 254 points, or 2 percent. Stocks recovered but still closed in the red. The Dow lost 140 points to end at 14,660, the S&P 500 dropped 19 points to finish at 1,573, and the Nasdaq gave up 36 points to close at 3,320.

Aside from the policies of the People's Bank of China, investors were concerned about interest rates, which the Fed has kept artificially low since 2008 in order to encourage borrowing. The yield on the 10-year Treasury note is up sharply since Fed chairman Ben Bernanke last week suggested that the central bank could begin to taper its bond-buying program in the near future. The 10-year Treasury yield, which reached its highest level in almost two years on Monday before falling back down somewhat, serves as a benchmark rate for loans including home mortgages.

Trying to allay fears about the short-term future of monetary policy, Federal Reserve Bank of Dallas President Richard Fisher told the Financial Times that Wall Street had overreacted to Bernanke's comments. In fact, Fisher said investors behaved like "feral hogs" after the chairman spoke on June 19, according to Bloomberg. Fisher supports reductions in bond-buying if current economic progress continues.

Some companies and stocks that made news Monday:
  • Financial stocks slumped in the wake of the Chinese central bank's announcement that it will continue its tight-money policy. Citigroup (C) and Bank of America (BAC) both lost more than 3 percent to close at $45.44 and $12.30, respectively, while JPMorgan Chase (JPM) was down 2 percent to $50.92. Citi also announced plans to open an office in Iraq, which would make it one of few U.S. financial firms with a presence in that country.
  • Apple (AAPL) lost almost 2.7 percent, ending at $402.54 after briefly dipping below the $400 mark for the first time since April. An analyst at Jefferies cut his price target on the company's shares to $405 from $420, citing diminished production levels for the iPhone, and reduced his full-year earnings and revenue estimates. In other bad news for Apple, Global Equities Research said that low morale is causing employees to leave, according to Bloomberg.
  • Tenet Healthcare (THC) rose 4.5 percent on news that it will acquire Vanguard Health Systems (VHS) in a deal valued at nearly $4.3 billion (including debt).
  • The day's biggest winner, by far, was hard-drive market STEC (STEC), which soared 87% on news that Western Digital (WDC) will buy it for $340 million. Western Digital dropped 3 percent.
  • Facebook (FB) sank more than 2.4 percent in the first day of trading after the company admitted to a data breach that compromised the contact information of 6 million users.
  • The Financial Times reports that Dell (DELL) has rejected a buyout bid by activist investor Carl Icahn. The computer maker's independent committee of directors found that Icahn's plan had a "$2.9 billion funding shortfall" and would return less money to investor than it claimed. A shareholder vote on the offer is scheduled for July 18.
And here are some things to watch for Tuesday:
  • Durable goods orders for May are out at 8:30 a.m. from the Commerce Department, and the S&P/Case-Shiller Home Price Index for April will be released at 9 a.m. According to economists surveyed by Bloomberg, both reports may show continued recovery.
  • New home sales for May are out at 10 a.m. from the Commerce Department.
  • The Consumer Confidence Index for June from the Conference Board comes out at 10 a.m.

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19 Comments

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nklswrth

Seeing this kind of rushed W/all Street reaction to sell -or buy- stocks in a hurry kinda makes you think our fund brokers gave us a line of crap about investing our money in a thoughtful, well researched and patient manner. Those of us with mutual funds will be lucky to even get our principal back after 30 years.

June 25 2013 at 9:23 AM Report abuse rate up rate down Reply
1 reply to nklswrth's comment
teaparty.usa.usa

ITS BEEN 4 YEARS IF RECORD UNEMPLOYMENT N STILL' RISING TODAY N IT WILL BE 4 MORE YEARS OF CRAP LEFT. !

June 25 2013 at 9:27 AM Report abuse +4 rate up rate down Reply
Brian Corvello

I'm sick of people talking about the "correction" and the "crash". What happened on Friday was neither.

1. What happened on Friday did not even come close to any of the top ten crashes in the modern history of the Stock Market.

2. The Stock Market opens to today at 14,660, about 400 points shy of TWICE what it was in 2008.

3. There is no sign of the "second Great Depression" yet. I don't see the bread lines and shanty towns.

So don't celebrate yet, baggers.

June 25 2013 at 9:18 AM Report abuse -2 rate up rate down Reply
lenders1

The correction was due for July BUT.... as we all know Wall Street has its own Bible. We should she a 600 point correction with a market acting as if was on rocky water to say the least. Summer months will bring out home buyers. Ones in bonds finally will be taking a step out of the pool. I must also agree with Michael witihn explaining about foreign markets - central banks etc.

June 25 2013 at 8:00 AM Report abuse -1 rate up rate down Reply
thefacts22

USA have a deadly combination,almost 8 trillion dollars,of NEW debt,accumulated by Obama,without any signs,that there is a healthy recovery,plus a health care that is forcing 90% of companies to ONLY hire temporary help......Bernanke monetary policies,have been wrong since day one,turning Wall Street into an inflated Gambling Casino,not reflecting the real economy.....all this mistakes have created corruption,the figures of our gdp,,unemployment etc are nowdays cooked for political reasons.....we have to stop

June 25 2013 at 3:39 AM Report abuse rate up rate down Reply
radareastbay

first term 7 trillion in more debt, 5 trillion new money printed , gdp at 2%, 23million out of work. so did borrow and spend solve things ( NO ) are you better off (NO) 4 more years of this narcis barrack obama wiill lead to a depression of a magnitude never seen before world wide.

June 25 2013 at 12:45 AM Report abuse rate up rate down Reply
jwmgrand

Till the banks lend $$$$$$$$$ again . to real people once again ..... we will be in free fall !

June 24 2013 at 11:22 PM Report abuse -2 rate up rate down Reply
Jean

Market doesn't seem to like the Idea of living without OPM support.

June 24 2013 at 11:21 PM Report abuse rate up rate down Reply
Blue Dolphin

As long as Berny and the Fed keep printing money this false market will continue up its inflated ways. I learned a lesson in 2000 when my entire portifolio plunged 80%...I've stayed out and have led a stress free life through basic savings with a 5 3/4% return.

June 24 2013 at 8:33 PM Report abuse +5 rate up rate down Reply
rmilyard55

I don't know about the rest of you scared little turkeys, but I have made nothing but money under Obama in the stock market, while two weeks into GW I lost half the value of my total stock holdings. I am always amazed at the stupid uninformed remarks about the stock markets ups and downs (THAT IS WHAT IS DOES).
If you can't take the heat (and it seems like this is an ever growing crowd), THEN GET OUT!

June 24 2013 at 8:14 PM Report abuse -10 rate up rate down Reply
3 replies to rmilyard55's comment
analyst0042

I am by no means an Obama fan. However, the stock market recent decline has nothing to with Obama. The fed has been pumping in excess money..now it feels the economy is strong enough to start gradually reducing that excess amount towards the end of this yr or the beginning of 2014.
The market is throwing a tantrum...when the tantrum is over..maybe 10 to 15% total decline as measured by S&P.....the market will recover. This is a correction...usually 2-3 corrections each yr...the market never goes straight up or straight down. The time to start INCHING back into the market or start getting in....is after each major decline day...say 100 points or more. You will never make money in the market if you wait for the all clear bell to sound or getting in when everybody is gushing how wonderful the market is....you just have to be careful....pay attention to what is going on economically and with the fed. Its not hard just study up a little and pay attention....which is the key to success in any endeavor. I am sorry I cannot blame Obama for this decline but fair is fair.

June 24 2013 at 6:48 PM Report abuse -2 rate up rate down Reply