Ultimate Market Recap: Stocks Crash 2%, EU Savior in the Balance

Tuesday Morning’s Top Stories

Greek debt holders have now been asked to take a 60 percent write down on their bonds’ face values after a July request for a 21 percent reduction in their bonds’ net present value. This previous plan didn’t require cuts but instead asked participants take a swap for delayed repayments, according to the Financial Times. The Institute of International Finance, representing international banks, has offered a different solution: a 40 percent cut in net present values.

Netflix Inc (NASDAQ:NFLX) shares tanked almost 40 percent in preopen trading after Monday’s poor third quarter earnings report. The company has reported a sea of subscriber cancellations from increased prices and weak fourth quarter earnings estimates range from 36 cents to 70 cents a share on revenue from $816 million to $845 million. Analysts had expected $1.05 per share profits from $923.7 million in revenue.

Don’t Miss: Netflix Shareholders Fear the Future, Sell After Earnings Report.

Unhappy Shanghai homeowners protested at real estate showrooms this past weekend after developers cut residential home prices by 25 to 30 percent to attract new buyers. Around 400 homeowners demanded either refunds or the right to cancel their contracts. Protesters were injured and one sales office was damaged by the angry homeowners. Adding fuel to the fire was recent news that new home sales in Shanghai per square footage dropped 20.1 percent and major commercial banks raised interest rates charges on first-home purchases.

Visa Inc (NYSE:V) and MasterCard Inc (NYSE:MA) plan to begin using consumers’ credit-card purchases and targeting them through online ads to create new business. The companies hope to see profits by selling access to insights gleaned from the purchases.

Expectations are high for Amazon’s (NASDAQ:AMZN) third quarter earning report from increases in market share and Kindle sales. Many believe there’s a possible upside in Amazon’s fourth quarter guidance, but concerns remain about the upcoming margins of the Kindle Fire.

Tuesday Morning Hot Stocks

Shares of Netflix (NASDAQ:NFLX) are down more than 35% before the opening bell.  Yesterday, after the closing bell, Netflix reported third quarter earnings that showed the company lost 810,000 subscribers.  The company also gave a weak outlook for the fourth quarter.  Competitors include Apple(NASDAQ:AAPL), Google (NASDAQ:GOOG), and Dish Network (NASDAQ:DISH).

Investing Insights: Netflix, Inc. Earnings Cheat Sheet: Beats Estimates, Shares Down.

3M Co. (NYSE:MMM) is down nearly 7% after reporting third quarter profits.  Net income for the diversified machinery company fell to $1.09 billion ($1.52 per share) vs. $1.11 billion ($1.53 per share) a year earlier. This is a decline of 1.6% from the year earlier quarter. Check Out: 3M Earnings Cheat Sheet: Shrinking Margins for Fifth Consecutive Quarter, Net Income Falls.

Amazon (NASDAQ:AMZN) is edging slightly higher before its earnings release.  The online retailer is expected to report strong sales growth.  Analysts are expecting earnings of 24 cents per share, on revenue of $10.9 billion.  Last year, the company earned 51 cents per share on $7.56 billion of revenue.  The company competes for sales witheBay (NASDAQ:EBAY).

DuPont (NYSE:DD) is up 1.3% in early trading after reporting third quarter results.  Net income increased 23% to reach $452 million (48 cents per share), compared to $367 million (40 cents per share) last year. Don’t Miss: DuPont Earnings Cheat Sheet: Beats Expectations.

Despite a 13% decline in third quarter earnings, shares of Quest Diagnostics (NYSE:DGX) are trading 9.3% higher before the opening bell.  The company is also searching for its next Chief Executive, and raised its dividend by 70% to 17 cents per share. Investing Insights: Quest Diagnostics Inc. Earnings Cheat Sheet: Profit Goes South.

Market Recap

Markets closed down on Wall Street today: Dow -1.74%, S&P -2.00%, Nasdaq -2.26%, Oil +1.73%, Gold +3.01%.

On the commodities front, Oil (NYSE:USO) climbed to $91.53 a barrel. Precious metals were also up, with Gold (NYSE:GLD) climbing to $1,702.10 an ounce while Silver (NYSE:SLV) rose 5.12% to $33.27.

Hot Feature: Oil Rises to 12-Week High, Enters Bullish Territory.

Today’s markets were down because:

1) Europe. Fears that European policy makers won’t act to stem the sovereign debt crisis from spreading throughout the region have investors fearful for the future of the global economy. Yesterday, euro-zone leaders decided againstrestructuring Greek debt, instead hoping to entice bondholders to accept losses to help restore the country’s finances. They also ruled out using European Central Bank funds for the rescue facility, and have yet to settle upon a decisive course of action, which could include IMF involvement or private funding for the European Financial Stability Facility.

2) Consumer confidence. The Conference Board’s consumer sentiment index declined to its lower level since March 2009, when the global economy was in the throes of a full-blown recession. With limited job availability keeping unemployment high, home values continuing to deteriorate, and European nations continually threatening to default on their sovereign debt, consumer sentiment has been taking a beating. Many retailers (NYSE:XRT) are now forecasting weaker holiday shopping seasons than previously expected. At least FedEx (NYSE:FDX) and UPS (NYSE:UPS) expect record shipments.

3) Uh, Netflix. Talk about going from Prom Queen to the brothel … Netflix (NASDAQ:NFLX) is now the most hated stock on Wall Street. Today’s earnings revealed cancelations continue at a strong pace after the shocking price increase strategy. Is it the end of an era? On another tech note, Amazon (NASDAQ:AMZN) just announced after the bell and the stock is down 15%. The ecommerce giant is investing heavily in the future and it shows: Amazon’s profits fell 73%. Ouch.

After Hours Radar Stocks

Shares of Amazon (NASDAQ:AMZN) are getting whacked 17% in extended trading.  The online retailer giant reported less than expected third quarter earnings.  Net income was $63 million (14 cents per share), compared to $231 million (51 cents per share) last year.  Analysts were expecting earnings of 24 cents per share.  Shares of competitor eBay Inc. (NASDAQ:EBAY) are also trading 2% lower.

Investing Insights: Amazon.com Inc. Earnings Cheat Sheet: Bad Luck Continues.

International Business Machines (NYSE:IBM) is trading slightly lower after the closing bell.  The company reported that Chief Executive, Sam Palmisano, will step down as CEO at the beginning of 2012.  He will be replaced by global sales head, Virginia Rometty.  Shares of Hewlett-Packard (NYSE:HPQ) are trading slightly higher.

Panera Bread Company (NASDAQ:PNRA) is down .17% after reporting third quarter earnings.  Revenue increased 22% to $453 million, while net income came in at $29 million (97 cents per share).  Chipotle Mexican Grill (NYSE:CMG) is also edging lower, while McDonald’s (NYSE:MCD) is trading higher.

After closing 25% lower during regular market hours, shares of First Solar (NASDAQ:FSLR) is edging slightly higher in late trading.  Although the solar industry has been badly damaged this year, First Solar shares fell especially hard on Tuesday due to the company’s CEO stepping down after less than 3 years on the job.

Broadcom Corp (NASDAQ:BRCM) is down 4% in late trading after warning that its revenue would likely decrease this quarter due to industry softness.  Chief Executive Scott McGregor said, “While our outlook reflects potential industry softness , our long-term strategy is to continue to outgrow the overall semiconductor market with product innovations that drive new market growth and value.”