When was the last day we didn't have over a 100 point Dow swing in either direction? Well today it was a 76 point loss so things might be getting less volitile on the Street.
Are you having trouble getting a loan from a bank? One of the reasons below could be why.
Walmart seems to be losing its Mo Jo among consumers as they claim prices aren't as low as other stores.
Here are the top financial stories of the day:
1) French-German euro zone plan fails to inspire Wall St-From Reuters
U.S. stocks fell on Tuesday after three days of gains when a meeting between the heads of France and Germany failed to quell fears about euro zone leaders' ability to contain the region's sovereign debt woes.
Efforts to stem the spreading European debt crisis have so far been ineffective, a major reason for the equity market's declines in recent weeks. Stocks were unable to rally on Tuesday despite positive U.S. earnings and Fitch Ratings' decision to keep the AAA credit rating for the United States.
German Chancellor Angela Merkel and French President Nicolas Sarkozy detailed plans for closer euro zone integration but they did not include boosting the size of the euro zone's rescue fund or sales of euro bonds.
"The market wanted to see at least some forward movement, something concrete coming out of the meeting that would've been supportive to what's been dragging the market lower," said Marc Pado, U.S. market strategist at Cantor Fitzgerald in San Francisco.
Shares of financials, seen as vulnerable to a European fiscal crisis, added to their decline and were the worst-performing sector in the S&P 500. The S&P financial index was down 1.9 percent.
Merkel and Sarkozy said they would propose a tax on financial transactions, which hurt shares of exchange operators. Shares of NYSE Euronext fell 8.4 percent to $26.54, making it the worst performer in the S&P 500.
Shares of retailers Wal-Mart Stores Inc and Home Depot Inc both rose after the industry bellwethers exceeded analysts' expectations for quarterly numbers.
Dell Inc's shares dropped 4.9 percent in after-hours trading after the company reported revenue slightly below analysts' expectations and said sales in the present quarter would be flat.
Euro zone worries have weighed heavily on markets, most recently with last week's concerns about the solvency of French banks and the continued uncertainty over the European Central Bank's ability to control sovereign bond yields.
The Dow Jones industrial average dropped 76.97 points, or 0.67 percent, at 11,405.93, while the Standard & Poor's 500 Index declined 11.73 points, or 0.97 percent, at 1,192.76, and the Nasdaq Composite Index fell 31.75 points, or 1.24 percent, at 2,523.45.
Worries about the euro-zone troubles and a weakening U.S. economy have pushed U.S. stocks into correction territory after the S&P 500's closing high on April 29.
Data showed Germany's gross domestic product expanded just 0.1 percent from April to June versus the previous quarter, missing forecasts and knocking regional growth figures below expectations.
"We have France out with no growth yesterday and Germany out with no growth today. It broadens a picture that global economies have experienced a simultaneous pause," said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon.
Fitch confirmed the United States' top-notch credit rating less than two weeks after Standard & Poor's downgraded the United States to AA-plus.
Wal-Mart shares advanced 3.9 percent to $51.92 after the company said U.S. same-store sales turned positive in July. Home Depot shares gained 5.2 percent to $33.12 after the company raised its fiscal-year profit forecast for the second time in three months.
About 8.2 billion shares were traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, roughly in line with last year's daily average of 8.47 billion. About three stocks fell for every advancer on the New York Stock Exchange and about four shares declined for every advancing stock on the Nasdaq.
2) Why Banks Aren’t Lending: Weak Economy, Regulatory Uncertainty-From The Daily Ticker
U.S. banks got hammered last week on concerns the sovereign debt crisis in Europe coupled with slow growth and a weak U.S. consumer are setting the stage for another financial crisis. U.S. banks still have some troubling legacy assets on their balance sheets but for the most part they are in much healthier shape then back in 2008, says John Garvey head of U.S. banks and capital markets at PricewaterhouseCoopers.
"The banks have made pretty significant steps in the last couple of years to improve their stability in terms of their funding sources, in terms of capital."
If banks are better shape then why aren't they lending? Wasn't the point of TARP and the rest of the bailouts to ensure banks could lend and support the economy?
Despite a slight improvement in the Fed's most recent survey of senior loan officers, bank lending remains stunted for several reasons, Garvey argues, including:
1. Underwriting standards have improved.
2. Changes in consumer behavior. "People are paying down their debt, people are not taking on a lot of debt."
(These first two changes are long-term positives for U.S. fundamentals but in the near-term, "it's a cocktail for weak loan demand for the foreseeable future," he says.)
3. Larger companies are sitting on record amounts of cash don't need the money. Plus, they're not investing more because of the weak economy.
4. Banks are reluctant to lend to "marginal borrowers" in this weak economy.
5. Regulations rules have not been written yet. All this uncertainty means companies "hesitate to invest" and become "cautious," according to Garvey
Speaking of troubles in the banking industry, at the end of the interview, Aaron Task and Henry Blodget also asked Garvey about the role of accountants and auditors like his employer PWC in causing the banking crisis of 2008. "We felt like we performed as we should have," says Garvey.
3) Wal-Mart Loses Edge as Perception That Retailer No Longer Has Best Prices Undercuts Sales Turnaround-From The Wall Street Journal
Wal-Mart is losing its longstanding reputation for offering consumers the lowest prices, complicating its efforts to end a two-year sales slump in the U.S.
The Bentonville, Ark., retail colossus became the world's largest store chain by avoiding sales gimmicks through "every day low prices" on everything from food to sporting goods under one roof.
But surveys by retail consultants, analysts and brand experts now find that Wal-Mart's aura of price leadership has faded since the recession, because customers who searched for better deals sometimes found them at competitors such as Dollar General Corp., Aldi Inc. and Amazon.com Inc.
Wal-Mart continues to post stable profits and overall sales, thanks to a fast-growing international business and a resurgence at its Sam's Club members-only stores. But Wal-Mart's U.S. business, which accounts for some 60% of its $419 billion in annual revenue, is expected by analysts to notch a ninth consecutive quarter of declining sales at stores open at least a year when it reports earnings on Tuesday.
"The competitive landscape has changed," says Wendy Liebmann, chief executive of consultancy WSL/Strategic Retail, which recently surveyed 1,500 Wal-Mart shoppers and found that 86% no longer thought it had the lowest prices. "And the economic trends that are battering Wal-Mart's core shoppers are not diminishing."
A spokesman for the company declined to comment.
Wal-Mart has responded by returning to its roots. It is cutting the number of "rollbacks," or planned sales specials, after some customers concluded Wal-Mart was becoming as gimmicky as competitors. Wal-Mart also began restoring thousands of products it had removed from stores as it sought to tidy up cluttered aisles.
Yet with the back-to-the-future strategy slow to show improvement, retail experts are questioning whether
Wal-Mart can win back its market share. Some believe it must embrace new methods of building customer loyalty, such as the "REDcards" that award 5% discounts on purchases from rival Target Corp.
"Wal-Mart has lost mind share in the U.S.," said Citigroup analyst Deborah Weinswig. "In this environment, with high gas prices, you need to do something special to get a consumer to drive to your store."
Ms. Weinswig and other analysts believe many customers are choosing to drive to stores closer to their homes to reduce their fuel bills.
Although Wal-Mart's reputation for low prices may be waning, price reviews show it still is the cheapest place for consumers to buy many household staples such as groceries, toilet paper and toothpaste. A recent Goldman Sachs Group Inc. survey of store prices in Chicago found that Wal-Mart prices on identical toys, foods and health and beauty aids were lower than Target's across all categories and 6.2% less overall.
Morgan Stanley surveys have yielded similar results. But when it recently polled 1,100 Wal-Mart customers to see what they thought, it found the perception was quite different.
"We were shocked to see 60% of Wal-Mart shoppers no longer viewed Wal-Mart as having the lowest prices," says Morgan Stanley analyst Mark Wiltamuth, who expects the company's U.S. same-store sales to decline for the rest of the year due to the image problem. "It is difficult to improve your price perception during a time of inflation, because it is hard to tell if a store's prices are getting better when prices in general are going up."
Part of Wal-Mart's problem is that more shoppers are deciding its merchandise is not the best value for the money, according to YouGov's BrandIndex, a researcher that constantly polls consumers to track customer perceptions. One of the factors contributing to that perception was that many competitors to Wal-Mart began carrying items in amounts smaller than the bulk sizes favored by Wal-Mart, which sometimes cost more per unit but allowed consumers to meet basic needs such as buying toilet paper before their next paycheck, even if they only had a few dollars.
Wal-Mart's value perception dropped four points in its surveys compared to last year, while low-cost retail rivals such as Dollar Tree Inc. rose.
"That is the largest decline we have seen among discount retailers," says YouGov researcher Ted Marzilli. "It is pretty strong confirmation that consumer perceptions are changing."
Carolyn Martin, a 46-year-old Waynesville, N.C., resident, goes to Wal-Mart less frequently. "I find myself going to other grocery stores, other clothing stores and particularly to online ordering electronic items," she says.
While she still sometimes shops at Wal-Mart due to its one-stop convenience, she recently purchased dog and cat food at a Tractor Supply Co. store after concluding it was a better value.
Quote of the Day from Dave Ramsey.com:
We gain strength, and courage, and confidence by each experience in which we really stop to look fear in the face ... we must do that which we think we cannot. — Eleanor Roosevelt
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