Stocks Off Lows, but Energy Sags; FB Near $27 - CNBC Stocks Off Lows, but Energy Sags; FB Near $27 - CNBC

Thursday, May 31, 2012

Stocks Off Lows, but Energy Sags; FB Near $27 - CNBC

Stocks Off Lows, but Energy Sags; FB Near $27 - CNBC

Stocks continued to trade narrowly mixed Thursday even after the IMF denied an earlier report that it is in talks to provide a rescue loan to Spain.

But a spokesman said the annual economic talks between the IMF and Spanish authorities will take place next week.

“Clearly if [Spain’s Deputy Prime Minister] is meeting with Lagarde…these things will be discussed and they’re not going to make any statement about anything until something happens, but this should remind us that there are pools of liquidity,” said Zach Karabell, president of River Twice Research. “It’s not like anyone’s been unprepared for these realities.”

Meanwhile, Facebook [FB  Loading...      ()   ] traded near $27 a share, plunging nearly 30 percent from its market debut of $38 a share. The company is now valued at around $79 billion compared with $104 billion at the time of its IPO. Meanwhile, S&P Capital IQ lowered its price target on the firm to $27 from $30.

The Dow Jones Industrial Average bobbed in and out of positive territory, after posting a triple-digit loss in the previous session. The blue-chip index has not seen a two-day win streak this month and is on track for its biggest monthly point drop since May 2010.

Wal-Mart [WMT  Loading...      ()   ] led the Dow gainers, while Caterpillar [CAT  Loading...      ()   ] slipped.

The S&P 500 and the Nasdaq also shaved most of their losses. The CBOE Volatility Index, widely considered the best gauge of fear in the market, slipped near 24.

Among the key S&P sectors, energy slumped, while telecoms edged higher.

“Greece is obviously a risk and certainly a disorderly exit will disrupt Europe and the market,” said Russ Koesterich, global chief investment strategist at BlackRock's iShares Group. “But there are broader issues—Spanish banks are a bigger threat to the euro zone than Greece and we are concerned about Chinese growth and expect a soft landing…And we have an overhang in the U.S. as we get into the fourth quarter about whether or not we’ll be able to avert a fiscal drag.”

Stocks had been lower for most of the morning following an earlier batch of disappointing economic reports.

Weekly jobless claims rose 10,000 to a seasonally adjusted 383,000, gaining for the fourth-straight week, according to the Labor Department. And the U.S. economy grew at a slower pace than expected in the first quarter with GDP increasing at a 1.9 percent annual rate, according to the Commerce Department. 

Business activity in the Midwest slipped to 52.7 in May from 56.2 in April, according to the Chicago ISM.

And private-sector jobs growth came in at a disappointingly weak 133,000 from April to May, according to a report from ADP and Macroeconomic Advisors.

The reports come a day ahead of the widely-followed May government jobs. Non-farm payrolls are expected to show a gain of 150,000 in May, according to a Reuters poll, after a small gain of 115,000 new jobs in April, the fewest in six months.

Morgan Stanley [MS  Loading...      ()   ] CEO James Gorman defended his bank’s performance as lead underwriter on Facebook’s public offering, despite waves of criticism from investors and a potential legal review of the deal’s marketing.

In addition, the investment bank plans to buy 14 percent more of Smith Barney from Citi [C  Loading...      ()   ] and will begin a 90-day process determine the fair market value of the additional stake.

Most retailers posted solid same-store sales gains in May, with chains such as Target [TGT  Loading...      ()   ], TJX [TJX  Loading...      ()   ], and Limited [LTD  Loading...      ()   ] topping analysts' estimates for the month.

Meanwhile, Costco [COST  Loading...      ()   ], Buckle [BKE  Loading...      ()   ] and Wet Seal [WTSLA  Loading...      ()   ] all fell short of expectations.

Striking workers at a Caterpillar [CAT  Loading...      ()   ] plant in Illinois rejected the company's latest contract offer, an official with the International Association of Machinists and Aerospace Workers said.

Billionaire investor Carl Icahn, who last year failed to get his nominees elected to the board of Forest Laboratories [FRX  Loading...      ()   ], plans to back another slate of directors at the drugmaker's next shareholder meeting, according to a regulatory filing.

Talbots [TLB  Loading...      ()   ] skyrocketed almost 100 percent after private equity firm Sycamore Partners said it will acquire the women's clothing chain in a deal worth about $193 million.

Also on the M&A front, Gaylord Entertainment [GET  Loading...      ()   ] rallied after the company said it will sell the Gaylord hotels brand to Marriott International [MAR  Loading...      ()   ] for $210 million in cash.

U.S. Airways Group [LCC  Loading...      ()   ]and private equity firm TPG Capital may team up to bid for American Airlines' parent, AMR, people familiar with the discussions told Reuters.

Meanwhile, JetBlue [JBLU  Loading...      ()   ] gained after UBS raised its rating on the firm to "buy" from "neutral" and boosted its price target to $8 from $6.

Joy Global [JOY  Loading...      ()   ] tumbled after the mining equipment maker said it expects order rate to moderate and sales to remain unchanged over the next few quarters.

TiVo [TIVO  Loading...      ()   ] reported a bigger-than-expected quarterly loss and forecast another loss for the current quarter, as the maker of television recorders fights costly legal battles to protect its patents.

—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Coming Up This Week:

FRIDAY: Non-farm payrolls, personal income & outlays, ISM mfg index, construction spending, auto sales, Wal-Mart shareholders mtg

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Updated: Financial situation worsens - PL spokesman - Times of Malta

(Adds government's reaction)

The government’s financial situation in April continued to worsen at an alarming rate, the Labour Party’s spokesman for finance said.

Karmenu Vella said that according to figures published by the National Statistics Office, the deficit had reached €232 million, which was the highest ever in the first four months.

The deficit, Mr Vella said, was €90 million more than in the same period last year. But, in reality, it was much higher as the €232 million figure did not include the expenditure on the new parliament project.

Mr V ella said it was clear that the problem was in recurrent expenditure, which had increased by 11 per cent. This was at a time when the economy grew at a much slower rate in nominal terms.

According to the latest financial figures, debt servicing expenditure increased by €5 million in the first four months when it had been planned to increase by €2.5 million for the whole of 2012.

Expenditure on social benefits (programmes and initiatives) increased by €57 million in the first four months when this had been planned to increase by €37 million (€20 million more than planned).

Contributions to government entities had to go up by €13.5 million in a year but these had already gone up by €12.7 million in the first four months.

Mr Vella said that, in the first four months, the government had already surpassed its aim for the year by around €87 million.

On debt, he said that this had gone up to €4,676.1 million. If the €100 million extra budgetary units and the €15 million from the European Financial Stability Fund were added to that, the debt would reach €4,791 million. This was already over the government’s €122 million target for the whole year.

In these circumstances, the government should explain if it still believed its targets and if it was confident that they would be met. It should say what measures it would take during the rest of the year for the country’s precarious financial situation to return to the established targets.

In a reply, the government said that while the opposition continued with its work to hinder investment, in a report on all EU states the European Commission said yesterday that the Maltese economy was growing at a higher rate than the EU average and noted that the country’s deficit was below the three per cent European limit.

The government said the opposition tried to give the impression that the deficit was growing month after month quoting statistics of particular months without giving the full picture

The country’s strong financial situation was certified repeatedly in the past months including by the Eruoepan Commission, the International Monetary Fund and the International Labour Organisation.

US STOCKS SNAPSHOT - Wall St sharply cuts losses - Reuters UK

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