Stocks break losing streak

Apple and Baidu lift the Nasdaq. The Chinese premier wants to boost economic activity. Facebook sinks below its IPO price.

By TheStreet Staff May 21, 2012 7:49AM

TheStreetImage: Wall Street sign (© Corbis/SuperStock)By Andrea Tse


Updated at 4:22 p.m. ET


Stocks rallied Monday, rebounding from their worst weekly performance of 2012, after China said it would take steps to boost economic growth.

 

The Dow Jones Industrial Average ($INDU) rose by 135 points, or 1.1%, at 12,504. The S&P 500 ($INX) added 21 points, or 1.6%, at 1,316.


Shares of Facebook (FB), which made a shaky public debut on Friday, sank 11% Monday to $34.03, less than their IPO price of $38. Still, the Nasdaq ($COMPX) climbed 68 points, or 2.5%, to 2,847, as Apple (AAPL) and Baidu (BIDU) added more then 5%, helping the index double the Dow's pace.


Within the Dow, 23 of the index's 30 components gained, led by Caterpillar (CAT) and Boeing (BA).


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The number of rising stocks outpaced losers 4-to-1 on the New York Stock Exchange and nearly 3 to 1 on the Nasdaq. Technology, capital goods and basic materials shares were leading the gains, with most of the 10 S&P 500 large-cap sectors in positive territory.


Premier Wen Jiabao said over the weekend that he wants to see more measures taken to stimulate economic growth in China. China last week carried out some small measures, with expectations of more down the line, to stimulate domestic consumption after several lackluster economic reports, including weak retail sales and tepid import growth.

"What happens in China has a disproportionate effect on what happens elsewhere," said Telly Zachariades, partner at Valence.

Without providing details of the measures he has in mind, Wen said, "The relationship between maintaining growth, adjusting economic structures and managing inflation must be properly handled," according to the Xinhua News Agency. "We should continue to implement a proactive fiscal policy and a prudent monetary policy while giving more priority to maintaining growth."

Over the weekend at Camp David, Md., Group of Eight summit leaders expressed to German Chancellor Angela Merkel their desire to see more effort put into bolstering eurozone economic growth, though their urging did not result in any firm commitments or plans.


Leaders from the top economies said in a statement that their goal is to "promote growth and jobs." This was a departure from the view in favor of eurozone-wide austerity measures targeting burgeoning budget deficits.  


Toward the end of the summit, President Barack Obama said, "We agreed upon the importance of a strong and cohesive eurozone and affirmed our interest in Greece staying in the eurozone while respecting its commitments."


German Chancellor Angela Merkel, French President Francois Hollande and U.S. President Barack Obama together signed a statement at the summit outlining steps to promote growth alongside austerity measures to combat the eurozone debt crisis, but how to accomplish this has been a subject of much disagreement in Europe.


On Wednesday, European Union leaders will meet in Brussels to try to reach a compromise on this matter. While Hollande urges the acceptance of debt supported by the more powerful eurozone countries like Germany to fund growth in the weaker ones, such as Greece, Germany continues to argue against issuing bonds. Germany says that with eurobonds, such debt-laden countries would lose their motivation to clean up their fiscal problems while jeopardizing borrowing costs in the stronger countries. 

 

London's FTSE closed up 0.7%, and the DAX in Germany finished up 1%.

 

In corporate news, Facebook shares didn't gain as much as many investors had hoped on Friday, closing fractionally higher in the social network's debut as a public company. The shares reversed course Monday.


"When you look at the Facebook IPO, it may have some serious proving to do to see if they can make money from the millions if not billions of users," said Zachariades.


The CEO of Nasdaq (NDAQ) on Sunday acknowledged technology problems related to Facebook's listing on Friday, The Wall Street Journal reported. Nasdaq came under fire after trading in Facebook shares was delayed by 30 minutes on Friday.

 

JMP Securities analyst David Trone has downgraded the five major U.S. banks, citing concerns about the fallout of the European debt crisis, the upcoming expiration of Bush-era tax cuts and U.S. deficit issues. Bank of America (BAC), Citigroup (C), Goldman Sachs (GS), JPMorgan Chase (JPM) and Morgan Stanley (MS) had their ratings cut.

Barclays (BCS) said Monday that it is planning to sell its $6.1 billion stake in BlackRock (BLK). Barclays holds a 19.6% stake in the asset-management company. Barclays' shares rose 3.8% to $11.58, while BlackRock shares dropped 2.4% to $167.73.


Yahoo (YHOO) reached a deal to sell up to half of its stake in Alibaba back to the Chinese e-commerce company for about $7.1 billion. The two companies announced the deal late Sunday. If Alibaba purchases half of the stake for $7.1 billion, it will pay at least $6.3 billion in cash and up to $800 million worth of newly issued Alibaba preferred stock, the companies said. Yahoo shares added 1% to $15.58.


Lowe's (LOW) reported first-quarter earnings of $527 million, or 43 cents a share, beating the 42-cent estimate of analysts. But same-store sales rose 2.6%, less than expected. The stock lost 10% at $25.60.

 

The July crude oil contract rose $1.06 at $92.86 a barrel. June gold futures lost $3.20 at $1,588.40 an ounce.


317Comments
May 21, 2012 9:41AM
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Thank you to all who have become followers on Twitter!

 

Just a quick follow up to my FB posts from last week. There was a story posted Saturday about FB forcing a picture of a child with a birth defect to be removed from the mothers FB page. This is just the type of action that can and will land FB in the dog house. A bunch of spoiled little rich kids want to censor the content on toy.

As a pubicly held comapny this is not acceptable; and very possibly illegal from the standpoint of discrimination. Hopefully the loving mother of this child will take legal action and all of you FB users will make your voices heard to correct this.

Who is banned next-People of color-The Elderly-Those of certain sexual orientation?

Will Barry make sure that his equal rights for all includes those with birth defects and instruct the AG to file suit on behalf of all children with birth defects?

May 21, 2012 8:37AM
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As I have said repeatedly (ad nauseum) that TARP and the other bailouts may in fact had been "necessary," but the refusal to accept that perhaps their could have been a different way to implement it that could have changed everything, I now offer you this:

Irvin Goldman, who oversaw risks in the JPMorgan Chase & Co. (JPM) unit that suffered more than $2 billion in trading losses, was fired by another Wall Street firm in 2007 for money-losing bets that prompted a regulatory sanction at the firm, Cantor Fitzgerald LP, three people with direct knowledge of the matter said.

Again..... with our lack of punishment, and refusal to discipline these holier than thous has only emboldened them to continue on doing what they did that got us in trouble in the first place.  So prepare yourselves for another meltdown coming in the not so distant future.....

 
May 21, 2012 8:02AM
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"China's premier plans to take steps boost economic growth"

 

Maybe they will drop their labor rate to $50 a month?  Cheapen up their product?  Eliminate all EPA requirements?  Have their gov subsidize their manufacturing?  Wait...they're doing all this now!  At some point the laws of supply and demand will kick in.  China can take whatever measures they want but if they don't have a willing buyer for their goods...then "rots of ruck"...

May 21, 2012 7:58AM
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Well here comes the Monday morning hype!  I guess over the weekend all the the world's economic problems were solved so stock futures will open higher and investors will "cheer" the good news sending the market "soaring".  Same old sh*t just a different day.  I predict the market will be up between 75-100 points today as bargain hunters jump back in.
May 21, 2012 10:17AM
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So.....we bought into a "Global Economy". How's that been working for us so far? 
May 21, 2012 8:41AM
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"A new survey shows economists are growing slightly more optimistic about recovery in the job and housing markets but expect other pillars of the economy to remain weak."

 

Well here comes he "Hype & Hope".  Just another made up survey to give the impression all is well.  I would like to know the details of this survey but of course The Street Staff would never publish that...too much work!  Who are these "economists"?  Probably the same ones who have missed the boat on every other prediction they've made.  My recommendation, is to just stop producing surveys as they are nothing more than manipulated lies and serve no purpose other than to give the appearance that all is well in the economy when the reality it is not and that's the TRUTH!!

May 21, 2012 12:10PM
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I thought I wrote a made a very good point in a post today about how workers in America have and are looked down as less important for their hard work as opposed to the paper profit crowd.  Seems the minders felt my predictions may have not fit their format.  I think we have always been a land of builders, doers, and craftsmen.  Difficult to understand why the political process became so enamoured with the just say it is so crowd and let our skills be lost with this outsourcing idea.  Some say this outsourcing is like trickle down and has run its' course.  We shall see. I would like to see many more young people have trades and learn the great feeling of "contribution" when you are able to make something someone likes and appreciates.
May 21, 2012 8:57AM
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"Group of 8 pledge their support for Greece" Yes, let's go ahead and pour more money into that cess pool of corruption and waste. Unbelievable. And don't think this is out of the kindness of their hearts to save the people of Greece. They owe over a trillion, and all that bailout money (Read: borrowed future taxpayer money) is going to the bondholders. Who are the bondholders? The banks who were dumb enough to lend Greece the money to begin with.

 

Just another case of intentional mistakes, made by banksters to profit from our future wealth. Scumbags, the whole lot of them who profit off of this farce. 

May 21, 2012 9:39AM
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The problem with a government trying to boost growth is they are clueless.  They will resort to TAXING, SPENDING, BORROWING and DEBASING.  Obamanomics beleivers think you can create growth and prosperity that way, when in reality  all you can create is economic collapse via massive debt.

Government spending curtails growth.  It FIRST must suck the money out of the private economy and then re-direct it to some government spending that will usually not generate  any return whatsoever.   It is like the government giving a family 11,200 in "Stimulus" and then a bill for 11,400...  Which is what Obama did, except he spent the money for you because he knows how to spend your money better than you do.

The only way we can get America moving again is to Fire "57 States" and as many of his socialist donkey minions as possible...
May 21, 2012 9:09AM
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Four more years of this and we will all be on food stamps.
May 21, 2012 11:01AM
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"Wall Street rebounds on China stimulus hopes"

 

Central Economic Planning - didn't the Soviet Union try that?

 

I guess history has to repeat itself for us to learn, again, again, again>

 

May 21, 2012 8:22AM
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So now the AZ Sec of State is talking about taking Obama's name off the ballot if he doesn't submit acceptable proof of his place of birth.  Not that it really matters - AZ is probably going for Romney anyway.

Merkel under all kinds of pressure from the G8 to borrow and spend a bunch to prop up the eurozone.  She's holding strong for now and Germany is holding the trump card - if they drop out of EU, the whole thing will fall apart in a matter of months.  According to most reports, Obama didn't offer much in the way of ideas or leadership and spent most of the conference "listening and absorbing information".  Perhaps he was busy on his Blackberry, lining up campaign donations...

Zuckerberg got married the day after his IPO??  Hope he ponied up some cash to get a rock solid pre-nup drawn up.  He's holding 503 million shares of FB, so now he's worth about $20 billion.  Let's see, a $1.3 trillion federal budget deficit comes out to about $3.5 billion in deficit spending per day.  Hey, maybe Zuckerberg could donate everything he's now worth so the federal gov can operate at the break-even point for the next 6 days...

WYNN has taking a beating in the last couple weeks, could be ripe for a bounce...

May 21, 2012 3:22PM
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Let's see......

"NO" individual donations of more then $10.

"NO" corporate donations of more then $100.

"NO" lobbyists closer then 50 miles outside "beltway."

"NO" Dinners over $50 bucks per plate....

 

Yeah.....I think that will take care of "term limits."

May 21, 2012 10:32AM
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The G-8 summit did very little to provide solutions to the EU crisis . While all agreed that they needed to support growth & jobs, the leaders offered nothing in planning or commitments. This is a sharp departure from the focus on austerity measures, which the EU must do if it wants to keep the Euro, ( a waste IMO). Germany isn't going to foot the bill for the 'dead beats' and Hollande is leading the pack for this. Socialism doesn't work for a successful financial system. And in China- I can say I've seen with my own eyes that our poor in America would be 'kings' over there. That's how bad it is !

 

Think about it- are you liberal with your money or conservative with your money ? You'll find the successful ones are conservative !

May 21, 2012 11:31AM
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Wow, this morning, Wall Street is hoping that China have a strong affect on how stocks will perform.  Later today or some time this week, some one in China will break wind and blow away any hopes for a strong recovery here in the USA.

 

How about instead of waiting for some miracle cure for the economy to come from Asia or Europe or any other place, we just build up our own economy and get our economic strength from our own efforts?  In the news, they say that buy America is getting stronger because more Americans are buying American made produces.  Like to know where these products are being sold though because I am still not seeing very many "Made in the USA" tags on anythign here.  We have everything we need to help boost the economy through our own efforts, all that remains is having the guts to make it happen; and it starts with our government believing in American craftsmanship. 

May 21, 2012 9:42AM
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Re-tog-

You're wrong.  Barrack is Irish....he's also German, Chinese, Italian, Native American, African American, Australian, Hawaiian.... you know, he's Jesus....just ask him.
May 21, 2012 8:54AM
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"China's premier plans to take steps boost economic growth. G8 leaders pledge their support for Greece. European stocks climb."

 

The polictical leaders who are screwing up the world economy, think they are going to fix it with the same plan that screwed it up in the first place.

 

Welcome aboard China.

May 21, 2012 9:24AM
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Interesting.  Think that the government has 'crossed' some lines.  Arizona is particularly pissed off.  Their governor and a well-known and respected sheriff are about to blow the lid off for libs. The economy is getting much worse.  Look, it is that it may be beyond discussion.  We have no 'leaders'.  We cannot even vet them properly as seen, now.  Our country is in very sad shape.  As one gentleman put it to me yesterday...we cannot surive another 4 years of O'Bama. This is getting very bad, people.

May 21, 2012 8:57AM
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Sad to see China stepping up as the economic powerhouse since that spot has been ours for decades. I guess we can now ease up on the guilt trip we have been put on. You know, the one where our consumption is holding the third world countries down in poverty. Now China can kick in and start policing the world and giving away billions in foreign aid with little or no strings attached. After all that's how a world leader is supposed to be. 
May 21, 2012 2:32PM
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Exceo...

Frankly I could care less what you think of me. Perhaps you should look into some of what Bain capital actually has done.   No one buys a business for the purpose of closing it.  Little money to be made that way unless the real estate or assets are vastly understated.  So your undertaker role shows you to be clueless...

Now if the company can be turned around and made profitable then it can be sold at a profit.  Of course the previous owners had no further involvement in the business.  They sold it.  The original owners  were happy to do so in most cases.

Had you bothered to do your homework you would  no this.   A Perfect example is company that was in the Chicago area down the road from me when  I was there.  Bain Capital bought Wesley-Jessen division from Shering-Plough, who was going to close the unit.   Within 2 years they turned around a company that  had lost money for 8 years in a row.  4 years later they took the company public.  It was profitable every year Bain owned it and was profitable the entire time it was public, before Novartis purchased it in a hostile takeover.  

Bain saved over 2000 jobs in the deal and made money to  boot.

My question to you is why are you infatuated with the worst destroyer of jobs, "57 States" since Carter?   This corrupt administration is truly clueless as you are....  What were you an Ex-CEO of? A lemonade stand that folded?
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