Dow Tumbles 200 Points on Weak Earnings, Economic Data

Dow Jones industrial average drops over 200 points
Spencer Platt/Getty Images

NEW YORK -- U.S. stocks fell sharply midday Thursday, with the Dow Jones industrial average slumping more than 200 points, as disappointing economic data and Walmart earnings sent investors scrambling for safer assets.

Keeping score: The Dow Jones industrial average (^DJI) was down 179 points, or 1.1 percent, to 16,436 as of 12:10 p.m. Eastern time. The Dow had been down as much as 204 points at midday. The Standard & Poor's 500 index (^GPSC) fell 23 points, or 1.2 percent, to 1,865 and the Nasdaq composite (^IXIC) slid 55 points, or 1.3 percent, to 4,045.

Avoiding risk: The Russell 2000 index (^RUT), which is made up primarily of smaller, more risky companies, fell more than 1.5 percent, and is trading at its low for the year.

Factory slowdown: U.S. industrial production dropped in April, the Federal Reserve said Thursday, possibly due to more bad weather. Production fell by 0.6 percent versus the 0.1 percent gain that economists expected. Factory output, which excludes mines and utilities, fell by 0.4 percent. Another manufacturing-related report, the Philadelphia Fed index, also came in short of expectations.

The quote: "People are just a little bit nervous about the entire global economic environment at the moment," said Ryan Larson, head of U.S. equities at the Royal Bank of Canada.

Retail rout: Walmart Stores (WMT) fell $1.64, or 2 percent, to $77.10. The company reported a 5 percent profit decline in its most recent quarter and warned that things don't look much better this quarter. The company, like many other retailers, blamed harsh winter weather. Department store operator Kohl's (KSS) also fell sharply after reporting a 15 percent drop in first-quarter earnings. Its comparable-store sales fell 3.4 percent. Analysts were looking for a slight uptick.

Buying safety: With stocks sliding, investors bought bonds. The yield on the U.S. 10-year note fell below 2.5 percent for the first time in 2014. The bond rally has surprised many investors this year, since many thought the improving economy and the end of the Federal Reserve's bond-buying program would cause yields to move higher. There was talk among traders that foreign buyers have raced into the U.S. Treasury market looking for safety and bigger yields, which might be distorting the move in bonds. Despite their fall, yields of U.S. government bond are higher than those of some developed economies.

"This flight to quality is overwhelming bond investors," said Tom di Galoma, a fixed-income trader at ED&F Man Capital.

Price pop: U.S. consumer prices rose at their fastest pace in nearly a year in April, the Labor Department said Thursday. The consumer price index, an often-quoted barometer of inflation in the U.S., rose by 0.3 percent last month due to higher food and gas prices. Inflation is on pace to rise 2 percent this year. While not alarming, it is noticeably higher than a year ago.

Jobs: One positive economic report was jobless claims. The Labor Department said the number of people who filed for unemployment benefits fell to its lowest level in seven years last week. Weekly unemployment benefit applications fell by 24,000 to 297,000. Economists had predicted a much smaller drop in jobless claims applications.

Cisco surge: Telecommunications equipment maker Cisco (CSCO) jumped $1.67, or 7 percent, to $24.44. Cisco reported an adjusted profit of 51 cents a share, three cents better than expectations.

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Like anyone who dumped stocks today really knows what is going to happen.

May 15 2014 at 4:40 PM Report abuse rate up rate down Reply
1 reply to Davie2743's comment

Basically the market had a Justice Potter-Tepper moment.
" It knows it when it sees it."

May 15 2014 at 4:54 PM Report abuse rate up rate down Reply

When is the media going to tell the truth? There is NO WAY after giving up most of our well paying jobs by way of Bill Clintons NAFTA. And after the banking fiasco also caused by Bill Clinton passing a law reversing the Glass-Steagel Act and removing the restrictions from the banks and the insurance companies. You can NOT replace $30 a hour jobs with $10 a hour jobs and break even. You now have less spendable cash and alot less taxes going into the IRS.
This is just COMMON SENSE. But do you hear Obama trying to fix the mess, NO. He is worried about the gays and removing our guns before the slower among us figure this out. We are DOOMED by both parties but the tax and spend liberals have broken the bank.
And for you diehard Obama followers we have 5 years of his lies and deceit. He has talked about policy that affects only the very few odd balls of our country. Gay marriage, legal pot and removing our rights. This country is sinking like a rock. And guess what free loaders. Your free ride is heading for a dead end.

May 15 2014 at 4:32 PM Report abuse rate up rate down Reply

WHAT is so "great" and "positive" about 297,000 more unemployment claims??????

May 15 2014 at 3:54 PM Report abuse +4 rate up rate down Reply
1 reply to Valerie's comment

These aren't "more" claims, they're "newt" claims.

The difference is that each week since the inception of unemployment benefits, some number of people have filed benefit claims. This happens in strong employment markets and weak employment markets, primarily because our economy is dynamic. This means at any given point in time, some are hiring, while others are shrinking.

Of course, at the same time, and precisely because of the above, every week some former unemployment benefit recipients find a new job, and no long collect benefits.

The measure discussed in the article ONLY looks at those new filers. However, total recipients may well have declined.

May 15 2014 at 7:05 PM Report abuse -1 rate up rate down Reply

ACA is a Ponzi.

USA is Insolvent........................$ 90 Trillion in Debt.

No Good Jobs.

New Normal is New Reality . DEMS can't grow the Economy.

Karl Marx is a Fizzle !

May 15 2014 at 3:51 PM Report abuse +2 rate up rate down Reply

Can't be true. Mr. Clueless President says all is fine. and we know he would not LIE.

May 15 2014 at 3:30 PM Report abuse +1 rate up rate down Reply
1 reply to robtucan's comment

That's what they do best. The problem is there are not enough people in this country that are smart enough to see it!

May 15 2014 at 3:56 PM Report abuse -1 rate up rate down Reply

I wonder how much of that unemployment claims drop you can attribute to Republicans cutting off benefits to the long-term unemployed by refusing to extend them?

May 15 2014 at 3:28 PM Report abuse -1 rate up rate down Reply
4 replies to boston1936's comment

An economy based on production of goods in Asia is a house of cards since we are the largest debtor nation in the world. We have only the people in DC to thank for this and now the people must rise and let their voices be heard that we aren't going to sit by and watch our country turn into Detroit so that a few CEOs, board members, and a hand full of investors can get rich while we are colonized by them for profits on Wall Street investors and too big to fail bankers. We must end our differences at the grass roots and unite against the Kochs in this world and take our country back for our childrens sake and the future of our nation.

May 15 2014 at 3:21 PM Report abuse +2 rate up rate down Reply
1 reply to drbuckles's comment

Bleat much?

May 15 2014 at 7:09 PM Report abuse rate up rate down Reply

Thats a big surprise ? Just ask anyone in a business that is not an absolute neccessity , you will be met with a lot of laughing and then a VERY worried look . PEOPLE ARE NOT SPENDING very simple , they are scared and frightened about not having enough to eat and pay their bills. Gas is astronomical, food is as well, lets not even talk about airfares of entertainment. The adminstration just sits by and thinks that there will be a rainbow soon...Im so glad that the 18-35 year old who voted for these clowns will be here to pay the bill and there will be a big bill .....

May 15 2014 at 3:17 PM Report abuse +3 rate up rate down Reply
2 replies to rexitalia's comment

The Republicans in the House are part of the equation. Obama isn't an absolute monarch that does as he pleases. Where is the trickle down effect of their tax cut strategy for the rich?

May 15 2014 at 3:30 PM Report abuse -2 rate up rate down Reply
1 reply to boston1936's comment

He has a pen and a cell phone and said he WILL do as he pleases. I notice that a lot of Obama's friends and supporters got exemptions from the debacle called Obamacare.

May 15 2014 at 4:03 PM Report abuse +1 rate up rate down

There is a rainbow. It just isn't on Fox news. Tell me what you want Obama to do now that he has saved the world economy from the republican fiasco we were all in (well all but the super rich that took the poor, middleclass and taxpayers to the cleaners.) The money was stolen by republican policy and their big lie about tax cuts for the rich creating jobs. Be honest for a change.

May 15 2014 at 3:44 PM Report abuse -2 rate up rate down Reply

We are doing just fine…. Don't fear….. Our Economy is full of Hope…

May 15 2014 at 2:55 PM Report abuse rate up rate down Reply
1 reply to abudotcom's comment

Yes it is. Boy I remember when Bush left office and the world was happy to get rid of him. Bush was losing 810,000 jobs a month but you want to blame Obama after he saved us.

May 15 2014 at 3:46 PM Report abuse -3 rate up rate down Reply
1 reply to whydothat's comment

Unemployment went from a high of 7.6% under Bush to over 10% under Obama

Which do you think is worse, dunce?

May 15 2014 at 7:12 PM Report abuse rate up rate down

So if Walmart has a bad quarter everything goes downhill? I guess walmart is running the show now, HA HA

May 15 2014 at 2:46 PM Report abuse rate up rate down Reply