Weekly Losses of 4% in U.S. Indexes, Facebook IPO Falters

Bikram Pandey
18 May, 2012
New York City

The U.S. indexes extended losses and closed lower and for the week, the S&P 500 index dropped 4.1% and the Nasdaq tumbled 5%. Facebook on the first day of trading needed underwriter support to prevent the stock falling below its offer price. World markets extend losses for the fourth week.

[R]4:00 PM New York – The U.S. indexes extended losses and closed lower and for the week, the S&P 500 index dropped 4.1% and the Nasdaq tumbled 5%. Facebook on the first day of trading needed underwriter support to prevent the stock falling below its offer price. World markets extend losses for the fourth week.[/R]

U.S. indexes accelerated the decline in indexes in the afternoon as investors focused on the ongoing weakness in the euro zone and rising tension in the Spanish banking system.

Facebook rallied more than 7% on its first day of trading after a delayed opening at 11.30 a.m. after the social networking site priced 421.2 million shares at $38 each.

The online game company Zynga Inc dropped more than 8% in volatile trading that broke circuit breakers several times and traded three times the average trading volume. Zynga was halted two times after it plunged 14% after Facebook traded below several traders’ expectations.

In U.S. earnings news, Ann first quarter net rose 5% and lifted second quarter outlook. Donaldson third quarter increased 15% to $70.9 million. Foot Locker first quarter net surged 36% to $128 million. Salesforce.com first quarter net swung to $19.5 million loss. The Gap first quarter net was flat at $233 million.

Autodesk Inc plunged 14% after the engineering software developer estimated second quarter earnings less than expected.

In European trading, indexes extended losses for the fourth week and politicians across the region express confidence in the euro even after Greek departure.

In European corporate news, ArcelorMittal agreed to sell its steel distribution business to Nucor for $605 million. DSM agreed to acquire Ocean Nutrition Canada for C$540 million.

Stocks in Japan declined sharply after global economic growth worries mounted and the euro zone uncertainties rose as Spanish banks face another round of capitalization. Exporters declined and the euro dropped to a three month low.

Australian stocks traded lower and the benchmark index closed down 2.7% on Friday and plunged 5.6% in the week. The weekly loss was the worst in the last eight months. The Australian dollar traded near the low of the year.

Commodities, Bonds and Currencies

The yields on 10-year U.S. bond increased to 1.71% and 30-year U.S. bond edged lower to 2.80%.

The U.S. dollar edged up to $1.272 to one euro and eased against the Japanese yen to 79.12 yen in New York trading.

Immediate delivery futures of Texas crude oil decreased $1.29 to $91.27 a barrel and Brent crude futures decreased 56 cents to $106.93. Futures of natural gas increased 0.12 cents to $2.73 per mbtu and gasoline price eased 0.79 cents to 288.62 cents a gallon.

In metals trading, copper eased 1.90 cents to $3.46 per pound, gold extended gains for the second days in a row by $15.20 to $1,590.10 per ounce and silver increased 54 cents to $28.54.