Closing Bell: Stocks Tumble Again on Fed Stimulus, Earnings Worries

new york stock exchange traders wall street economy federal reserve stimulus
Scott Eells/Bloomberg via Getty Images
Renewed concern that the Federal Reserve will soon throttle back its support for the economy and warnings of weaker sales from two major companies sent stocks much lower Thursday.

The Dow Jones industrial average (^DJI) tumbled 225 points, or 1.5 percent to 15,112, the Standard & Poor's 500 index (^GPSC) surrendered 24 points, or 1.4 percent, to 1,661, and the Nasdaq composite index (^IXIC) lopped off 63 points, or 1.7 percent, to 3,606.

More signs that the economy was slowly recovering appeared to weigh on the market. An improving economy raises the likelihood that the Fed will start backing off its monthly purchase of $85 billion in bonds. Many investors believe that the Fed's effort has underpinned the recent bullish stock market.

Among the numerous economic reports released Thursday were those that showed confidence among homebuilders rising to an eight-year high in August and weekly claims for jobless benefits falling to a near six-year low. Mortgage-buyer Freddie Mac also reported that mortgage rates held steady in the latest week, giving prospective homebuyers more time to lock in historically low levels.

Fresh data released Thursday also showed consumer prices rose broadly last month, and the number of foreclosures recorded in July fell 31 percent, putting the U.S. on track to end the year with the fewest home repossessions since 2007.

Data on manufacturing, meanwhile, were less encouraging, though economists were little fazed and said it merely suggested the improvement in factory activity was slower than had been anticipated.

In company news, Walmart Stores (WMT) shares fell 2.5 percent to $74.45 after the discount retailer posted disappointing same-store sales and missed revenue estimates for a fifth consecutive quarter. The company also lowered its revenue and profit forecasts for the year.

And Cisco Systems (CSCO) fell 7.1 percent to $24.48 as a slew of brokerages cut their price targets on the stock. The network equipment maker said Wednesday it will cut 4,000 jobs, or 5 percent of its workforce, as sales slow.

More Stocks in the News:
  • Shares of Cisco's smaller rivals, Ciena Corp. and F5 Networks, also ended lower. Ciena (CIEN) fell 5.6 percent to $21.24 while F5 Network (FFIV) slipped around 3.6 percent to $89.22.
  • One of the few bright spots in retail earnings was Kohl's (KSS), which reported a rise in quarterly same-store sales, sending its stock up 5.3 percent to $53.54.
  • Real-estate stocks headed lower on expectations that interest rates would rise. Equity Residential (EQR) lost 1.5 percent to $51.79, while Kimco Realty (KIM) dropped 2 percent to end at $21.29.
  • Billionaire investor George Soros added another 2 million shares to his stake in struggling retailer J.C. Penney (JCP), regulatory filings showed. The retailer's stock rose 5.5 percent to $13.83.
  • Warren Buffett's Berkshire Hathaway shed its stake in newspaper and broadcasting company Gannett Co. (GCI), which sent shares of Gannett falling 5.1 percent to $24.29.
  • Gun-maker Smith & Wesson Holding's (SWHC) shares dropped 7.9 percent to $11.22 after a KeyBanc analyst downgraded the stock to "underweight" from "hold," citing recent outsized gains in the stock's price, coupled with lower retail demand.
What to Watch Friday:
  • At 8:30 a.m. Eastern time, the Commerce Department releases housing-starts data for July, and the Labor Department releases second-quarter productivity data.
  • The University of Michigan reports its initial reading of August consumer sentiment at 9:55 a.m.
-Compiled from staff and wire reports.

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The Republican Congress from approximate 2006 time period created a framework that enabled the wealthy to become even more wealty. The consolidation of wealth upward into the hands of no more than 1% of the Country's population remains unparalleled in history. Add to that the Republican-controlled Supreme Court, lead by Justice Scallia (the Good Lord has a sense of humour as the name rhymes with "Scallywag") who allowed corporations to discharge pensions in bankruptcy and once can see just how the stage is set for the overwhelming majority of citizens to be nothing more than servants for the ultra-wealthy. The only way the current Republican politicians (they have lost their idioligal way from what used to be a good, moderate party) stay in power is through manipulation of the media. And, my fine feathered friends, truth is the first casualty. To a large degree, the result is synonomous with Emperor Nero placing the ass in the Roman Senate. The grab for power has taken on a new, sinister and quite disturbing aspect....the Supreme Court has gutted any voter protection and allowed Voter Registration requirements already appearing from the Southern States. They moved so quickly that the ink had not yet dried on the sham document denominated a "decision" by the Supreme Court. Should we act as President Bush did, and actually encouraged folks to do, simply disregard it and conduct our affairs reflecting our absolute contempt for both the decision and those who issued it? Larry

August 16 2013 at 9:11 AM Report abuse +1 rate up rate down Reply


August 16 2013 at 7:52 AM Report abuse +1 rate up rate down Reply

Watch Commodity Futures tank as the big players get spooked and short and dump. Their SCAM of high speed software on trades ignoring oversupplies are coming to a end. Take a look at all the diesel leaving the Country then ask why everything you need like fuel, food, clothes are ALL going up. Diesel is actually much cheaper to refine than gasoline. The refineries are laughing all the way to the bank as they give you your empty wallet back. What a bunch of SHEEP we are....bah...bah...

August 16 2013 at 7:30 AM Report abuse +1 rate up rate down Reply

Anyone really surprised here? The Fed has been artificially proping up the stock market for a while! The Obama Fat Cats were doing well while unemployment still remained high. Sooner or later it will return to where it should actually be.

August 16 2013 at 6:24 AM Report abuse +2 rate up rate down Reply

home foreclosuers down because there's fewer homes to close down very simple.has nothing to do with the economy picking up..i don't see where and how it is ever going to pick up..the only thing i see is more self help homes and many many government subsidize apartments going up and many many more food stamp receipients...

August 16 2013 at 1:21 AM Report abuse +2 rate up rate down Reply

I could give you some insider trading tips.

August 15 2013 at 9:20 PM Report abuse +1 rate up rate down Reply

FIRE THE FED. We would be better off.

August 15 2013 at 8:51 PM Report abuse +1 rate up rate down Reply

If the Obama supporters say it was all his greatness when there are good stories, then that means Obama sent the stock markets down today. Thanks a lot Obama..

August 15 2013 at 8:33 PM Report abuse rate up rate down Reply

It is amazing how the lunatic left doesn't have a clue.

August 15 2013 at 8:30 PM Report abuse +1 rate up rate down Reply
1 reply to betty_brock's comment

I know I do not have a clue darling.

August 15 2013 at 9:16 PM Report abuse rate up rate down Reply

The market is acting the way it is because without the Fed propping it up with their printing of money that is being injected into it, our economy can't stand on it's own. If the GNP can only advance at a snails pace ( about 1.5% in the first half of the year) it could be worse if the Fed stops printing. This after almost 5 years of Obama's policies & nothing to show in the way of growth or a recovery.

August 15 2013 at 8:19 PM Report abuse +1 rate up rate down Reply