LinkedIn's stunning debut pushes stocks higher

The Dow gains 45 as LinkedIn shares more than double. Initial jobless claims fall, but a manufacturing report is weaker and home sales sag. Crude oil drops below $99 a barrel. Japan slips into recession.

By Charley Blaine May 19, 2011 12:43PM

Charley BlaineUpdated: 6:50 p.m. ET

Stocks finished higher for the second straight day, reversing a midmorning swoon, on investor hunger for shares of social-networking site LinkedIn (LNKD) and optimism that the jobs market may not be as bad as thought.

LinkedIn shares were priced at $45 in an initial public offering Wednesday night. They opened today at $83 and shot up to as high as $122.70 before dropping back to $109.44 at the close.


That values the company at more than $9 billion. Many market watchers believe the  surge in the price was way too much and that social-networking companies are receiving valuations that make no sense.

The LinkedIn news and what appeared to be a successful $10 billion IPO in London of Swiss commodity-trading giant Glencore International seemed to cheer investors.

 

Article continues below.

The Dow Jones industrials ($INDU) closed up 45 points to 12,605. The Standard & Poor's 500 Index ($INX) was up 3 points to 1,344, and the Nasdaq Composite Index ($COMPX) was up 8 points to 2,823.

The decline in initial jobless claims offset weakness in a closely watched report on manufacturing prospects from the Philadelphia Federal Reserve Bank that was weaker than expected. So was a report on April existing-home sales from the National Association of Realtors. And The Conference Board's April report on leading economic indicators also was weak.


There are few big earnings reports on Friday and no economic reports. But women's apparel maker Gap (GPS) may pressure stocks after the apparel maker missed on earnings estimates and cut its future guidance. Shares fell 15.3% to $19.72 after hours after rising 0.9% to $23.29 in regular trading. Futures trading suggests the open will be lower.


LinkedIn: Biggest Internet IPO since Google
To put the LinkedIn performance in perspective: At 7.84 million shares, LinkedIn's offering was the biggest U.S. Internet IPO since Google (GOOG) went public in August 2004. It shows there is a big group of investors who believe there's money to be made in social networking.


Maybe too big. Google finished only 18% higher on its first day of trading.


Smart Money said LinkedIn may be the most expensive stock in the country. Its current price is some 275 times its earnings over the last four quarters of $15.6 million. 

The LinkedIn IPO is being closely watched as a gauge of how IPOs might fare for Facebook, coupon-company Groupon and others.

The IPO also has been controversial, The Wall Street Journal noted, because many in Silicon Valley and on Wall Street say investors are being taken in by a new Internet bubble.

"Eyebrows are raised around this valuation," Macquarie Capital analyst Benjamin Schachter told The New York Times. "People are trying to figure out how do we value the companies that are coming online?"

LinkedIn is one of the best-known sites for career networking and recruitment, along with Monster Worldwide (MWW) and Salesforce.com (CRM), which were up 0.1% to $15.01  and 1.2% to $135.81, respectively.


Commodity prices dip

Commodity prices also were weaker and affected many stocks. Energy shares were lower as crude oil (-CL) in New York settled down $1.66 to $98.44 a barrel. Brent crude was off 96 cents to $111.34 a barrel in London.


As a result, oil drillers and other oil services companies were lower.  Schlumberger (SLB) dropped 0.2% to $83.58. Diamond Offshore (DO) fell 1% to $72.06.

Gold (-GC) settled at $1,492.40 an ounce, down $3.40. Silver (-SI) dropped 16.5 cents to settle at $34.932 an ounce. Copper (-HG) was down 5.25 cents to $4.0485 a pound. 


Freeport-McMoRan Copper & Gold (FCX) fell 1.3% to $47.97. U.S. Steel (X) was off 0.5% to $45.44.

Interest rates were flat, with the 10-year Treasury yield finishing at 3.171%, unchanged from Wednesday.


Energy prices -- New York close
 
 Thur.  Wed.  Month chg.  YTD chg.
Crude oil (-CL)

$98.44  $100.10  -13.60%  7.73%
(per barrel)

 

 

 

 
Heating oil (-HO)

$2.8947  $2.9059  -11.63%  13.80%
(per gallon)

 

 

 

 
Natural gas (-NG)

$4.0940  $4.1980  -12.86%  -7.06%
(per mil. BTU)

 

 

 

 
Unleaded gasoline (-RB)

$2.9260

$4.1980

-15.55%

19.27%
(per gallon)

 

 

 

 
Brent crude 

$112.50  $112.30  -10.93%  18.34%
(per barrel)











Retail gasoline

$3.9050

$3.9260

-0.10%

27.12%
(per gallon; AAA)












Decent news on jobless claims; other reports are weak
The Labor Department said early Thursday that the number of Americans filing for unemployment insurance for the first time dropped 29,000 to 409,000 in the week ended May 14, down from 438,000 in the previous week, according to Briefing.com.

Continuing claims dropped 81,000 to 3.711 million from 3.792 million. The sharper-than-expected drop in claims suggests layoffs might be slowing once again after spiking in recent weeks.

The National Association of Realtors said existing-home sales slid 0.8% to 5.05 million in April from a downward-revised 5.09 million in March. Economists had expected existing-home sales to rise 5.23 million. The sales rate was also down 12.9% from April 2010, when buyers could qualify for a tax credit.

All-cash transactions, mostly investors snapping up foreclosed homes, were 31% in April -- still high, but down from the record 35% in March.

The Philadelphia Federal Reserve Bank said regional manufacturing activity improved slightly in May, but the index fell from its readings in the previous month. The Philadelphia Fed Index dropped sharply to 3.9 from 18.5 in April, its lowest reading since October.

Meanwhile, The Conference Board said the Leading Indicators Index dropped 0.3% in April after rising 0.7% in March.
 
Japan’s economy shrank at an annual rate of 3.7% in the first quarter, the Japanese government said today,  tipping the country into a recession, as the March 11 earthquake and tsunami disrupted production and prompted consumers to cut back on spending.

The drop-off was worse than economists had expected. Among 23 economists surveyed by Bloomberg, the average projection was for a drop of 1.9%.

Economists project that the Japanese economy will shrink again in the current quarter, which ends in June, as production continues to falter and weigh on industrial output and exports. 


Nineteen of the 30 Dow stocks finished higher, led by American Express (AXP), up 1.5% to $51.82, and McDonald's (MCD), up 1.2% to $82.51.


Meanwhile, 64 Nasdaq-100 ($NDX.X) stocks were higher, led by Chinese stocks Ctrip International (CTRP) and Baidu (BIDU), up 3.5% to $44.82 and3.1% to 135.88, respectively. The index rose 7 points to 2,370.


Thermo Fisher Scientific (TMO) and Tellabs (TLAB) were the S&P 500 leaders, up 4.2% to $65.38 and 3.2% to $4.70, respectively. Thermo Fisher will buy Swedish diagnostics company Phadia for 2.47 billion euros ($3.5 billion) to grow in testing for allergies and autoimmune diseases.


Laggards and leaders
NetEase.com (NTES), up 2% to $46.85. China’s second-biggest online-games operator said first-quarter profit rose 63%, as titles such as “World of Warcraft” helped attract players in the world’s biggest Internet market.

PetSmart (PETM), up 7.6% to $45.71. The pet-store chain said profit in the first quarter was 61 cents a share, exceeding the average analyst estimate of 55 cents.

GameStop (GME), up 2.4% to $27.32. The video-game retailer forecast second-quarter earnings of 23 cents a share at most, trailing the average analyst estimate of 28 cents.

Intel (INTC), down 1.4% to $23.54,  the laggard among the 30 Dow stocks. The world’s largest chipmaker, KLA-Tencor (KLAC) and Applied Materials (AMAT) were downgraded by Goldman Sachs Group, which cited increased competition from tablet computers and excess supply. KLA-Tencor dropped 3.8% to $41.21. Applied Materials declined 1.2% to $14.33.

Sears Holdings (SHLD), down 2.6% to $73.86. The department operator lost $170 million, or $1.58 a share, down from a profit of $16 million, or 14 cents a share, a year ago. Sales fell 3.4% to $9.71 billion. Earlier this month, Sears had projected a quarterly loss of $1.35 to $1.81 a share. U.S. same-store sales fell 3.6%, including a 5.2% drop at the Sears chain and a 1.6% decrease at Kmart. Weather was a big problem, CEO Lou D'Ambrosio said. But Sears itself didn't operate very well.

Limited Brands (LTD) down 3.9% to $40.81. The clothing retailer that owns Victoria’s Secret and Bath & Body Works forecast second-quarter earnings of as little as 38 cents a share, falling short of the 43-cent average estimate by analysts.


Short hits from the markets -- New York close
 
 Thur.  Wed.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.040%

0.040%

0.00%

-66.67%
5-year Treasury note 

1.822%

1.842%

-7.75%

-9.62%
10-year Treasury note

3.171%

3.171%

-3.79%

-4.05%
30-year Treasury bond

4.302%

4.288%

-2.36%

-1.38%
Currencies











U.S. Dollar Index

75.277

75.632

2.97%

-5.06%
British pound

$1.6223

$1.6176

-2.82%

3.96%
(in U.S. $)











U.S. $ in pounds

£0.616

£0.618

2.90%

-3.81%
Euro in dollars

$1.432

$1.426

-3.36%

7.00%
(in U.S. $)











U.S. $ in euros

€ 0.699

€ 0.702

3.48%

-6.54%
U.S. $ in yen 

81.699

81.650

0.33%

0.41%
U.S. $ in Chinese

6.529

6.502

0.25%

-1.31%
yuan











Canada dollar

$1.033

$1.032

-2.11%

2.95%
(in U.S. $)











U.S. dollar 

$0.969

$0.969

2.15%

-2.87%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,492.40

$1,495.80

-4.11%

5.00%
(per troy ounce)

 

 





Copper (-HG)

$4.049

$4.105

-3.03%

-8.96%
(per pound)











Silver (-SI)

$34.932

$35.097

-28.12%

12.91%
(per troy ounce)











Wheat (-ZW)

$8.1825

$8.1700

2.12%

3.02%
(per bushel)











Corn (-ZC)

$7.4875

$7.4975

-0.70%

20.28%
(per bushel)











Cotton 

$1.5565  $1.5986  -1.50%  7.49%
(per pound)











Coffee 

$2.64  $2.70  -12.06%  0.0964657
(per pound)











Crude oil (-CL)

$98.44

$100.10

-13.60%

7.73%
(per barrel)











52Comments
May 19, 2011 1:51PM
avatar
What a crock of $hit. The economy is worse off now then last year at this time. Next week the real unemployment numbers will show huge job losses. These reports do not take into account under employees orb those who have given up. They also count illegal farm workers that are harvesting crops.
May 19, 2011 2:25PM
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The drop in continuing claims means those folks have exhausted their 99 weeks and are no longer counted.  We are still showing over 400k new claims each month. If you look at the ready willing and able numbers of the working age population right now there are 45% of those unemployed or under employed.  Stop and think, if a company like McDonalds post listings for 50,000 openings and you get a million applicants to flip burgers at minimum wage, something is definitely wrong in the job market.   This is the lowest rate of able to work employed since 1985.

 

WalMart, Target and Home Depot are all forcasting lower sales as the consumer tightens its belt and buys just the basics.  Right now the average household pays 20% of its income for food and gasoline.  Once you factor in house payment or rent, utilities and such there is very little discretionary income left.  Its a Catch 22, income levels are down and no one is hiring and the consumer is cutting back because of the drop in income and higher prices.  The consumer would spend more if there was more income but small businesses can't create jobs if their is no demand. 

May 19, 2011 2:26PM
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The mass majority of people who lost jobs in 2009 are now running out of unemployment benefits so they are not being counted anymore regardless of whether they have jobs or not. Those who have been barely hanging on via unemployment are no longer being counted. Many of them have taken part time minimum wage jobs that won't pay the bills so they are still losing homes. The only jobs I have seen advertised are HVAC, electrician, plumbing, or minimum wage, part time, temporary jobs. Professional jobs or educator jobs are still being cut. I don't think those professions who put 8-10 years into education just to get cut when schools closed or offices closed are seeing any improvement. Most of them can't even go back to school for re-training as Pell grants will not help people who already have  a BA or higher in any field obtain a new degree in a different field. Plus they are already in debt often times for student loans from the first degree they choose so they can't afford or had to default on when they lost jobs the loans they had so they don't qualify for new/more loans to go back for a new degree. They are stuck with worthless pieces of paper saying they are qualified for jobs which don't exist anymore.
May 19, 2011 3:12PM
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What are you, new?  The job claims have fallen because some people can no longer get unemployment.  HELLO!  They've been on unemployment for 2 years and now they have nothing.  You people need to get a clue.
May 19, 2011 4:01PM
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LinkedIN cheers investors?  I find it perturbing and puzzling that people would buy this stock at a price of 275 times earnings.  Does anybody remember the dot com bubble?  What happened to good old fashioned reason, logic and common sense?

LinkedIn cheers investors...Goldman Sachs and other dirtbags on wall street must be laughing their butts off.  There is a sucker born every minute. 

May 19, 2011 5:14PM
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Who cares if you get a job now. Gas prices make it $20 to go anywhere. Food prices make it $20 a day to eat. After rent, insurance, and utilities you would have to make $40K a year just to break even. Only way to survive is with "roommates", like 10 of them, like Mexico. Oh, now I get it. We all have to live like Mexican farm labor to get by because the rich think that's what everyone should be doing for them because that's what they can get cheapest. Thank God for computers, all employers do is ask it how to make the most money and it says F$%#K people. End of story.

May 19, 2011 5:30PM
avatar

"Stocks finished higher for the second straight day, reversing a midmorning swoon, on investor hunger for shares of social-networking site and optimism that the jobs market may not be as bad as thought."       Disappointed

 

Well, which is it??? A couple of days ago the job market did not meet expectations. Now this.

 

It's time for regulation of Wall Street, Banks, and the ouster of lobbyist. We had 40 years of prosperity after WW2, when banks WERE regulated.    Baring teeth



May 19, 2011 3:10PM
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Surprised here are the elites that taxpayer, mirage guy, havasu, et al want to protect from paying taxes.  one can surely see why our hearts should bleed for them ..... (full article at msn investing home page)

 

How the gap is bad for business

Let's take a closer look at some of the problems this growing pay gap represents:

  • One big one is that the gains in corporate profits last year that were used to justify those huge CEO pay hikes often came at the expense of workers. Profits soared in large part because of layoffs during the recession.
  • Another is simply the sense of unfairness created by the widening gap in CEO pay compared with pay for regular workers. Everyone tightened belts during the recession; everyone worked harder. Why do only executives see a payoff? "People just find this outrageous and unfair, that certain people would be valued so much more than others," says Sarah Anderson of the Institute for Policy Studies.
  • Perhaps more important, there's a solid argument that these kinds of huge pay gaps are bad for the economy, say Anderson and other pay critics. One of the founders of modern management science, Peter Drucker, suggested the maximum ratio between top management pay and worker pay should be no greater than about 25-to-1. Any more than that and it's "difficult to foster the kind of teamwork and trust that businesses need to succeed," says Rick Wartzman, the executive director of the Drucker Institute.

To put it another way, when the pay gap is too wide, employee morale and productivity decline, says Brandon Rees, deputy director of the AFL-CIO Office of Investment. Plus, turnover can increase, which is also bad for business. A big part of the problem is that when rank and file pay levels are too low compared with the pay at the top, workers no longer feel like stakeholders in a company. Not only do academic research and analysis by the Brookings Institution bear this out, but we can see it in the real world.

May 19, 2011 3:32PM
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Like I post every day of the week, be very cautious, we are having a (insert tug of war, battle, real fight, tough time, etc.) ___________________________ down here but unfortunately at (insert any military time during any trading day)  ________ hrs the (insert any derogatory term such as scumbags, dirtbags, cheaters, ***wipes, etc.)  ____________ called to accelerate the selling so down we go,,,,Why? (insert either because they can, because they are unregulated trash, because our country sucks, or any other self-protecting paranoid phrase) ___________________________  now all we can do is (insert fight to stay on the green, fight to protect our gains, watch as they tear us apart, whine incessantly, keep a stiff upper lip, etc.) ___________________ ...Oh well, (insert crooks, cheaters, conmen, inside traders, hedge fund elites, etc.) _____________ still (insert control, kings, rule, etc.)  on Wall Street...More (insert after the close, later, after I lose all my investment, after my nap, etc.) __________________________.
May 19, 2011 3:12PM
avatar
Like we said earlier, be very cautious! We are having a tug of war down here, but unfortunately, at 1420 hrs scumbags called to accelerate the buying, so up we go..... Why? Because they can. Now all we can do is fight to stay in the red...Oh well, crooks still kings on Wall Street...More after the close.
May 19, 2011 4:14PM
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They also tend to have the most negative attitudes and invest little time at the library or recycling center reading and learning to improve their life.

Sounds like you are describing most of the people here , Popper.

 

Don't wory though - at 6 pm Saturday May 21, all your problems will go away...or maybe not.

 

Folks- here's some advise, hang out at your favorite store about that time. Grab all the stuff the Raptured ones leave behind. Grab their car keys too.

May 19, 2011 11:56PM
avatar

Nerd  au contraire ken, not as currency but a superior CURRENCY RESERVE FOR ALL:

 

Gold holds value why? Because someone says it does? It has a long history for being the median of exchange between civilizations? Who cares! It has no more value really than a rock in the bottom of a creek bed except it is more rare.

actually gold is more than the median of exchange, it is THE PREMIER medium of exchange since the dawn of time.  in addition to rare and useful in industry, gold is worshipped in many cultures where it is shaped into gods, used in Christianity (goblets and serving trays suitable to honor the Body of Christ), valued as bridal and other gifts of honor, and worn as jewelry by hundreds of millions of people.  but that is only a beginning on the cultural side of its enduring value.

 

in addition, it is the most malleable, by far, of any of the precious metals, bar none (a little pun there).  this means it may be worn as jewelry one day and formed into coins of exchange the next. not done yet.

 

in addition, gold is easily assayed (checked as to being the real thing).

 

all of these factors, in addition to rarity and industrial use, make it the greatest store of value known to man.  diss gold at you own peril as higher, or even hyper-, inflation lurks in the shadows.

 

got gold?                                              StarStarStarStarStar  

May 19, 2011 4:08PM
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Yes active, I know some folks personally that are in that too low income bracket and as soon as they work enough each week to risk losing a portion of their food stamps, free cell phone and health care aid, they call off work. They work roughly 9 days per pay period. I realize not everybody trapped in this situation games the system ,but, their absenteeism gets them passed over for merit raises and promotions.
They also tend to have the most negative attitudes and invest little time at the library or recycling center reading and learning to improve their life. 
May 19, 2011 4:09PM
avatar

Active -

swell!  -now we can just copy and paste our comments.

 

Greatest idea ever.  When is your IPO?  I want in.

May 19, 2011 9:16PM
avatar
Silver liber:  By the way.. here are the march YOY numbers for foreign t-bills:
Country, Mar 2011, Mar 2010
China,        1,144.9B, 895.2B
Japan,           907.9B, 783.3B
UK,                 325.2B, 279B
Oil exporters 222.3,223.4
Brazil             193.5, 164.5
Taiwan          156.1, 124.8

So.. no.. other countries are continuing to hold US debt, and increase it.  Month over Month is always a little up and a little down, so YOY gives the results of the trends
May 19, 2011 9:03PM
avatar
Ken:  You're neglecting of the biggest items on commodity currency.  Borrowing!!!  If I borrow 10oz of gold and the market price of gold commodity goes up, I have to cut the price of my products to maintain the relative value of the commodity and my product.  The bank isn't going to want to hear it.  

People say that it leads to stability because the world can buy and hoard dollars... kind of like they can buy and hoard the backing commodity.  May as well let the value of the commodity go up relative to dollars if they're going to do that instead of force every other price to constantly adjust to the new market value of the commodity.  In other words, if gold doubles relative to other goods... let it double.  Don't make it force every other price (except contractual debts) get cut in half.  If gold's value relative to other goods is cut in half, let it be cut in half instead of forcing every other price (except contractual debts) to double.

In the immortal words of the classic film "I'm Gonna Git You Sucka"    "No Junebug.. not the gold!!"
May 20, 2011 12:16AM
avatar

Thinking  great explanation vf, just wondering ....

 

Jones:  With 400K+ first time claims, but still net gains in total employment what is that saying about the how quickly they could be finding new jobs?
what does a few hundred thousand net new jobs each month, compared to the tens of millions out of work, mean to our country's nascent economic recovery?  i say debatable at best and flimsy at worst - can you say possible double dip? Thumbs downThumbs upThumbs down
May 19, 2011 2:33PM
avatar
One-third of USA houses are purchased with CASH.

Proof that the rich are eating the poor. 

Phony equity loans, crash, then swoop in.

May 19, 2011 2:33PM
avatar
Like we said earlier, be very cautious, we are having a tug of war down here but unfortunately at 1420 hrs scumbags called to accelerate the selling so down we go,,,,Why? Because they can, now all we can do is fight to stay on the green...Oh well, crooks still kings on Wall Street...More after the close.
May 19, 2011 10:28PM
avatar
I was telling friends and neighbors that couldn't care less about politics, that President Obama had just announced that rocks and pebbles were now the new US currency. As I type this and looking out my home office window, they are all still cursing, pushing, shoving and fighting while trying to collect the biggest, smoothest and shiniest rocks. The crowd seems to be growing by the minute..... OMG!..... now everyone's drawing weapons and starting to shoot, stab and blow each other up. It's like Armageddon out there. Oh well!..... At least it's good for our overpopulation problem. While they kill each other off, I'll go take a nap. It's far more rewarding and refreshing! Sleepy Hmmmm..... Greed is good for something positive after all. Thumbs up Kill baby, kill! Hot
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