Wall Street Tracks Lower European Markets, RiM Plunges 10%

Arjun Dave
30 May, 2012
New York City

Stocks in New York fell after European markets eased and bond yields of Spain reached a new high. Pending home sales fell in April. Research in Motion plunged 10% after it estimated operating loss and hired bankers for a strategic review. Apple chief confirmed the interest in building a TV device.

[R]10:15 AM New York – Stocks in New York traded lower after European markets declined and bond yields of Spain reached a new high. Pending home sales fell in April. Research in Motion plunged 10% after it estimated operating loss and hired bankers for a strategic review. Apple chief confirmed the interest in building television set or a device.[/R]

U.S. stocks declined in early trading after pending home sales contracts fell in April and ahead of employment report tomorrow.

The index of pending existing home sales declined 5.5% in the month and March sales were revised to 3.8% increased according to data released by the National Association of Realtors. Pending purchases increased in the Northeast but fell 6.8% in the South and declined 12% in the West.

Stocks were lower across most industry sectors after bond yields in Spain reached to a record high and the latest report from the European Commission highlighted evolving risks of contagion and the rising economic stress in Spain.

The European indexes traded lower as the fear of contagion took a deeper hold in the region and peripheral nations’ bond yields rose again.

Spanish bond yields rose to a record high since joining the euro and investors sought the safety of the principal as Swiss government sold short term bills of 688.8 million francs at a negative 0.62% interest rate.

Investors have been selling bonds of Portugal, Italy, Spain and Ireland and replacing with short term bonds of Germany, Switzerland and UK. Banks in Spain are also witnessing rising deposit withdrawals that may force Spain to seek international bailouts.

The Spanish banking crisis is taking its toll with the resignation of the Bank of Spain Governor Fernandez Ordonez before the expiry of his term. Ordonez said the government is still not sure how much capital Bankia will need and how the government will finance the bailout.

In New York trading, Research in Motion Limited ((RIMM)) dropped 9.7% or $1.09 to $10.14 after the maker of smart phones estimated operating loss in the quarter ending on June 2 and said that it may seek partnership and hired bankers to conduct a strategic review.

The company was not clear about the size of the loss and how many jobs will be eliminated and the company has seen a number of high level defections in the last few months. Head of global sales and chief legal officer have left the company and several mid level executives in Canada and in the U.S. have departed to other jobs in the industry.

123jump.com research team had highlighted competitive challenges the company faces and estimated stock to falter below $8 before the end of this summer and estimated rising losses as more customers defect and revived competition from the Nokia and Microsoft partnership.

Apple Inc ((AAPL) chief executive Tim Cook said at a gathering of media and technology executives in California that a TV based device “is an area of intense interest for us” and “we are going to keep pulling this string and see where it takes us.”

He did not answer a direct question if the company is working on a television set but the company is selling a $99 set top box called Apple TV that streams movie and video content.