Stocks slump on worries about Europe and jobs

The Dow falls 156 points on worries about Europe and disappointment with jobless claims and manufacturing weakness in mid-Atlantic states. Facebook prices its IPO at $38. Wal-Mart results cheer investors. Apple slumps.

By Charley Blaine May 17, 2012 11:26AM
Charley BlaineUpdated: 7 p.m. ET

Stocks slumped in late-day trading as worries about the domestic economy and the European debt crisis offset decent earnings from Wal-Mart Stores (WMT) and the interest in Facebook's initial public offering.

The Dow Jones industrials ($INDU) finished at their lowest level since Jan. 13. It was the blue chips' fifth straight loss and the 11th in 12 sessions. The euro dropped below $1.27, and the 10-year Treasury yield hit a record low 1.702%.

Facebook, meanwhile, priced its IPO at $38 a share, raising $16 billion for early investors and the company. It's the largest Internet IPO ever. Trading is expected to start at 11 a.m. ET Friday.

The IPO couldn't overcome the worries about Europe and the domestic economy. There was a a disappointing report on initial jobless claims and a surprising decline in manufacturing reported by the  Federal Reserve Bank of Philadelphia. The reports raised fears of a slowdown, although many economists believe the economy is stronger than a year ago.

The Dow closed down 156 points to 12,442. The Standard & Poor's 500 Index ($INX) was off 20 points to 1,305, also its fifth loss in a row and its lowest close since Jan. 17. The Nasdaq Composite Index ($COMPX) dropped 60 points to 2,814.

The Nasdaq-100 Index ($NDX), heavily influenced by Apple (AAPL), was off 53 points to 2,509. Apple was down $15.96 to $530.12. The stock is off 16.7% from its April 9 closing high of $636.23 -- perhaps, Barron's suggested, because of all the hype about the Facebook IPO. It is also known that several big hedge funds have trimmed their positions in the stock.

Facebook worth billions
At $38, Facebook is worth as much as $104 billion. There had been talk about raising the price to $39. Under SEC rules, the price could rise as much as 20% above the high end of the range.

But, The Wall Street Journal reported, investors rebuffed the company and its investment bankers.

The Facebook pricing is an important step in taking a company public. The pricing means the company sells the shares to its underwriters, who then market them to various customers before trading starts on Friday.

Morgan Stanley is the lead underwriter.

Energy prices -- New York close



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(per barrel)

Heating oil (-HO)




(per gallon)

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Unleaded gasoline (-RB)




(per gallon)

Brent crude 




(per barrel)

Retail gasoline




(per gallon; AAA)

After the close, shares of (CRM) and Applied Materials (AMAT) were both higher after quarterly results beat estimates. Both also boosted quarterly guidance. Shares of Autodesk (ADSK) were down as investors were disappointed the company did not boost its guidance.

Futures trading suggests the stock market may open up slightly. The fact is the market has become quite oversold, and a short-term rally at least is about to erupt.

Europe remains the big question
Adding to today's stress was continued weakness in European stocks as Greece's financial crisis weighed on investors. Truth be told, Europe was probably the biggest problem for the market.

The worries over Europe has pushed up demand for dollars; the euro has fallen against the dollar for 12 straight days. The U.S. Dollar Index, which measures the greenback against a basket of currencies, is also up for 12 straight days. The currency moves are a big reason why stocks are lower.

The euro was trading at $1.2708, down from Wednesday's $1.2721. The euro is trading at its lowest level against the dollar since Jan. 16. The 10-year Treasury yield fell to 1.702% from Wednesday's 1.765%.

The euro is why crude oil (-CL) in New York is lower. Crude settled at $92.49 a barrel, down 32 cents. It's off 11.7% this month and 6.3% this year.

So, one should not be surprised that stocks across Europe were down at least 1%.

Moody's Investor Service cut its ratings on four Spanish regions, citing their poor fiscal performance in 2011 and likelihood they won't meet goals set by the Spanish government. Ratings on two regions -- Catalunya and Murcia -- were dropped below investment grade.

Meanwhile, Brent crude was down $4.93 to $107.49 a barrel. It's flat on the year but was up 17.5% on March 1, when it settled at $126.20.

The national average price of unleaded regular gasoline was down to $3.722 a gallon from Wednesday's $3.728, according to AAA's Daily Fuel Gauge Report.

Gold (-GC), however, settled up $38.30 to $1,574.90 an ounce as safety remains a big concern for investors.

Jobless claims hold steady at 370,000; leading indicators slip
Jobless claims were unchanged at 370,000 in the latest week, the Labor Department said today. Economists had projected that claims would come in at 365,000. The data suggest nonfarm payrolls, to be reported on June 1, will rise by about 150,000.

Meanwhile, the Philadelphia Federal Reserve Bank said its manufacturing index fell to minus-5.8 in May from 8.5 in April, quite a bit lower than expected. Of greatest concern was that the report's employment index fell more than expected. But some economists cautioned that the report, while widely watched, can be quite volatile.

The Conference Board's Index of Leading Economic Indicators fell 0.1% after a 0.3% gain in March. The Street was looking for a gain of 0.1%. The index is used to forecast where the economy may be headed over the next three months.

Wal-Mart earnings impress; Caterpillar's growth is a concern
Wal-Mart was the top performer among the 30 Dow stocks. Shares moved up $2.49 to $61.68. The company said net income for the fiscal first quarter rose 10% to $3.74 billion, or $1.09 a share, from $3.4 billion, or 97 cents, a year ago. The Street estimate was $1.04 a share. Revenue rose 8.5% to $113 billion, ahead of the consensus estimate of $110.5 billion.

Caterpillar (CAT) was the Dow laggard, down $4.06 to $87.80. The company reported that sales over the February-April period were up 12% from a year ago. The problem is that sales growth has been slowing. It had been as high as 27% in the November-January period. North American sales in the February-April period were up 34%, although that was lower than November-January's 47% gain.

Caterpillar reports dealer sales growth on a three-month rolling basis.

Caterpillar shares are off 24.4% since peaking this year on Feb. 23 at $116.20.

Hewlett-Packard (HPQ) shares were up 3 cents to $22.06 on reports that the company will cut its workforce by roughly 8% or 25,000 jobs. An announcement is expected next week.

JPMorgan Chase (JPM) shares were down $1.53 to $33.93. The New York Times reported that active trading by hedge funds has boosted the loss resulting from JPMorgan's bad trade from $2 billion to $3 billion. JPMorgan sources disputed the assertion.

Sears Holdings (SHLD), up $1.55 to $52.42, was the top-performing S&P 500 stock. The company reported better-than-expected fiscal-first-quarter results and said it was spinning off part of its Sears Canada business. Sears earned $189 million, or $1.78 a share, up from a loss of $170 million, or $1.58, a year ago. Revenue was off 2.8% to $9.27 billion.

Only six Dow stocks were higher today, along with just 30 S&P 500 stocks and five Nasdaq-100 stocks.

Short hits from the markets -- New York close



Month chg.

YTD chg.
Treasury yields

13-week Treasury bill

0.0900%     0.090%

0.00%     800.00%
5-year Treasury note 

0.730%     0.740%

-9.99%     -12.05%
10-year Treasury note

1.702%     1.765%

-11.12%     -9.03%
30-year Treasury bond

2.805%     2.906%

-9.78%     -2.91%

U.S. Dollar Index

81.54     81.524     3.41%     1.26%
British pound

1.5813     1.5918     -2.64%     1.77%
(in U.S. $)

U.S. $ in pounds

£0.632     £0.628     2.71%     -1.74%
Euro in dollars

$1.27     $1.27     -4.07%     -1.92%
(in U.S. $)

U.S. $ in euros

€ 0.787     € 0.786     4.24%     1.96%
U.S. $ in yen 

79.30     80.34     -0.87%      2.85%
U.S. $ in Chinese

6.32     6.31     0.30%     -0.10%

Canada dollar

$0.982     $0.988     -3.05%     0.14%
(in U.S. $)

U.S. dollar 

$1.018     $1.012     3.07%     -0.22%
(in Canadian $)





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(per bushel)

Corn (-ZC)




(per bushel)





(per pound)





(per pound)

Crude oil (-CL)




(per barrel)


May 17, 2012 12:35PM
May 17, 2012 12:51PM

"The reports raised fears of a slowdown, although many economists believe the economy is stronger than a year ago."


What lousy journalism!  Who are these "economists"?  They don't have a clue what they are talking about so my advice to Charley is...stop reporting this type of nonsense!  And guess what...I "believe" that the economy is weaker than it was a year ago! 

May 17, 2012 12:58PM
"What does Romney and a newlywed have in common?  Well nothing.  At least the newlywed was smart enough to get engaged before making a commitment."

As opposed to Obummer, who courted his bride ( the American people ) with lies, and then fudge packed her after the wedding. I smell ( pun intended ) a divorce coming very soon!. Filing deadline; Nov. 2, 2012
May 17, 2012 12:26PM

Jobless numbers are about to go up as high school and college grads enter the work force, adding to the millions already looking for work.  The Facebook IPO is going to be a dud.  The Greeks will end up leaving the Eurozone and print their own worthless currency to pay back their debts, a soft default but a default none the less.  Spain is just about on the ropes as well and with the new socialist governments forming in France and Greece we are looking at the end of the EURO sooner than later.


The stock market looks like a repeat of 2010 and 2011 all over again.  Make all the gains on hype and manipulated data only to end up with a 5% gain by the end of the year.

May 17, 2012 4:24PM

Lets look at some other things that might indicate that we are headed for about a 20% drop from our current levels. The true unemployment rate is closer to 17% than the 8.2% the govt. says it is. Consumer debt is increasing at an alarming rate. After Greece leaves the Eurozone; Spain, Portugal, Ireland, and possibly Italy and France will follow. the holders of any European debt will suffer tremendous losses. This will inevitably lead to a major slowdown in the Chinese and the U.S. economies. There just will not be the demand for goods and services now produced. Oil prices are about to hit $90 per bbl and once that happens they will not stop until they reach $75 per bbl.  and every other commodity will most likely follow. I am looking at Dow 9,000 or lower by the election.


Bye Bye Barack-Your presidency will be forever compared to that of Jimmy Carter.

May 17, 2012 4:30PM
Obama has forfeited any further chance to kill us all.  Romney was not my favorite at all, but I have absolutely no reservations in voting for him in order to punish Obama.  I haven't contributed one dime to my ira in two years because of all this crap, instead on disastrous days like today I simply add between 5-10 dollars extra to my regular savings account, which of course is gaining nearly zero interest.  How much longer are we as a people going to put up with this crap?
May 17, 2012 1:20PM

Jobs, Manufacturing, and every other indicator of growth are going in the wrong direction. Could this be related to the fact that our "Great Socialist Leader" <Obama> has our entire country headed in the wrong direction.

Change I can believe in will be Mitt Romney in the White House next year!!!!

May 17, 2012 12:39PM

"Meanwhile, the Philadelphia Federal Reserve Bank said its manufacturing index fell to -5.8 in May from 8.5 in April, quite a bit lower than expected. Of greatest concern was that the report's employment index fell more than expected. But some economists cautioned that the report, while widely watched, can be quite volatile."


Oh really...can be quite volatile?  So if the report showed great improvement...I guess one could say that the report could be quite volatile...right?  Of course this would never be stated because when things are bad everyone tries to come back with an adjusted report to make things look better than they really are or they just attribute the great results to an "improving economy" and "consumer confidence".  The TRUTH is that our economy with perhaps a few exceptions...SUCKS! so just accept it and move on. 

May 17, 2012 3:13PM
I think it is interesting that people argue on this site about political policies and the unfairness of the tax system.  How about looking at what our taxes are paying for and eliminating all the duplication and waste because there is plenty of both.    I read that we have 230+ organizations that are working on some aspect of "homeland security".  I see how the doctors gouge my parent's medicare for treatments that they know won't fix anything..  $3,000 for a steroid shot.  I am not in the 1% but I am not in favor of raising my taxes so that some stupid politician can throw it in the garbage and not manage it wisely.
May 17, 2012 4:31PM
Hey man don't you get it those comapies are not stting on anything except borrowed money.......It is all an illusion to make you think they are still worth something.....Have the Wall Street smoke and mirrors...fooled you too....?  This economy is stalling as the real unemployment numbers are being  fudged ...the real unemployment rate should be now 17.3% not the 8.1% this government want to count it...Just like the the fudged numbers with the cost of living and the basket of CPI they conveniently exclude food and fuel.....WHAT IS THAT all about....? Do they thing we are stupid? ALL LIES TO SAVE FACE AND MISINFORM...!!!! Corporate america is doing the same....falsely generating stories about how much money they have when they don't...just so their stock is stable enough soto avoid a collapse and panic of sellers....!!! IT IS ALL A HOUSE OF CARDS AND IT IS BLOWING HARDER EVERY DAY TO UNDERMINE THE FALSE IMAGE OF SECURITY. 
May 17, 2012 1:25PM
"Change I can believe in will be Mitt Romney in the White House next year!!!!"

Sponge Bob and Patrick would be a step up from the Loony Tunes we have now.
May 17, 2012 12:36PM
Just watch when Facebook goes public the investors will "cheer" the good news and the market will soar despite all the negative economic news.  As long as there is Facebook to save the world economy housing starts, unemployment, job creation, inflation, etc. just won't matters as the investors will just "shrug off" the negative news.  All get on your knees and bow to the mighty Facebook!!
May 17, 2012 12:19PM
Stocks slip?  It's nearly a 100 point loss.  Party's over until Wall St is assured of a Romney win.
May 17, 2012 12:31PM
Bend over - here comes Facebook to make everything feel better............. Different day, same old government approved racketeering - legalized corporate fraud at its best.
May 17, 2012 3:26PM

November can't get here soon enough.

May 17, 2012 11:54AM
Yes, it is still good to invest in companies with good fundamentals. I don't see facebook as a lasting entity. Careful investing would limit exposure to fad offerings that rely on frenzy and a pumped up news cycle. Why would facebook need the money generated by their IPO and what leverage are they going to gain by getting it? Oh well, a fool and their money........

May 17, 2012 4:55PM
Well, now we are upset about another stupid Wall Street Expectation Job Report that didn't meet up to Wall Street Expectations!  Like who the fluck cares about Wall Street Expectations.  And why would manufacturing go up if people are not spending money due to #1 reason which is Wall Street burning everyone's savings that they have accumulated from years ago.  Oh, but does Wall Street care, Heck no!  As long as they can put a dime in their pocket they don't give 2 craps about anybody else! It's a shame that our nation has declined so badly when it comes to morals as well as honesty!
May 17, 2012 2:39PM
clownfeet, I don't entirely disagree with you. However, Obama's plan has always been redistribution of wealth, and government dependency. His current preferred method is creating more tax funded jobs disguised as economic growth, and then raising taxes to cover the costs. This isn't working as the american people aren't as dumb as he would like to believe.

May 17, 2012 4:35PM
G-8 meeting tomorrow should have some interesting discussions.  Stay tuned to see if Germany's austerity plan brings down the European economy and puts a serious dent in world economic stability.
May 17, 2012 5:00PM
JPM is in big trouble, just as they collapsed Bear Sterns, they themselves are falling prey to naked short selling. Hedge funds smell blood in the water. Morgan's derivative trading "error" will end up costing them 6-8 billion dollars. Sadly, this is just the tip of the iceberg, they hold about 79 TRILLION dollars in derivatives that are leveraged up to 40 to one, once these start to move against the bank they will collapse sending them to the government for another bailout. JPM also has a huge Silver position, they shorted 550 million ounces at 24 an ounce (silver now at 28). Unfortunately JPM will drag the economy down with them, get ready folks this is about to get very, very ugly.
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