Dow off 75 as Europe's crisis worsens

The blue chips rebound from a brief 108-point loss. As Spain rescues one of its biggest banks, Standard & Poor's see its economy worsening. Consumer confidence strengthens. Facebook and Apple weigh on the Nasdaq. Gold and crude oil move higher.

By Charley Blaine May 25, 2012 1:03PM
Charley BlaineUpdated: 6:02 p.m. ET.

Despite a late sag today, stocks closed higher for the first time after three weeks of declines.

A big rally Monday was the key to the week's gain. The market fell back Friday after Spain was forced to inject nearly $24 billion to prop up one of its largest banks. As the announcement of the rescue of Bankia was made, Standard & Poor's downgraded Bankia and four other Spanish banks and said it believes Spain is entering a double-dip recession that will lead to a large increase in troubled assets.

Spain is a more troubling problem than Greece for the European Union's efforts to recover from the 2008-2009 financial crisis. It is Europe's fifth largest economy, and its problems are the result of a real-estate bust as devastating as the bursting of the U.S. real-estate bubble.

The market's decline came as Facebook (FB) shares were down $1.12 to $31.91, and investors worried about how the U.S. economy might perform if economies in Europe and China slow more than expected. Investors will have a long weekend to ponder the market's prospects. U.S. financial markets will close Monday for Memorial Day.

The Dow Jones industrials ($INDU) closed down 75 points to 12,454 after dropping as many as 108 points. The Standard & Poor's 500 Index ($INX) was off 3 points to 1,316, and the Nasdaq Composite Index ($COMPX) was down 2 points to 2,838. The Nasdaq-100 Index ($NDX), heavily influenced by Apple (AAPL), was off 4 points to 2,527.

Article continues below.
Apple was down $3.03 to $562.29. It had been as low as $558.47. Apple CEO Tim Cook was foregoing $75 million in dividends that were going to be paid to employees with restricted stock, the All Things D blog reported.

Here's how much Apple affected the Nasdaq-100: Fifty-five stocks in the index ended the day higher.

Only seven of the 30 Dow stocks were higher, led by Hewlett-Packard (HPQ), Wal-Mart Stores (WMT) and Intel (INTC). A total of 245 S&P 500 stocks had gains on the day.

The market's decline came despite a positive report on U.S. consumer confidence. The latest Reuters/University of Michigan Consumer Sentiment Index hit the highest level since October 2007.

Lower gas prices cheered consumers, but the bigger cause the index's gain was growing optimism about job prospects. That's the key to confidence going forward, said Richard Curtin, who directs the survey. While the markets obsess about Europe, he added, "Only a few consumers even mentioned was the potential impact on the domestic economy from the European financial crisis."

Telecommunications and utility stocks were the market leaders, with materials and industrial stocks the laggards.

Semiconductors were winners. SanDisk (SNDK), up $1.48 to $33.73,  was the top performer among S&P 500 and Nasdaq-100 stocks. Micron Technologies (MU) was the fourth-best S&P 500 performer, behind Newfield Exploration (NFX) and Big Lots (BIG). Micron was also the second-best Nasdaq-100 performer.

Volume today was very light, but next week could see more volatility. It's a short week and includes major economic reports including a revision to first-quarter Gross Domestic Product on Thursday and the May unemployment report on June 1.

The market began Friday with the Dow up 1.3% for the week, thanks to Monday's big rally. The S&P 500 had been up 2%, with the Nasdaq up 2.2%. At the close, the gains had been trimmed to 0.7% for the Dow, 1.7% for the S&P 500 and 2.1% for the Nasdaq.

With four trading days left in May, the Dow and S&P 500 are down 5.7% for the month, with the Nasdaq down 6.9%. If the declines hold, they would be the worst monthly performances since September for the Dow and S&P 500 and May 2010 for the Nasdaq.

The Dow and S&P are looking at their worst May performances since May 2010.

For the year, the Dow is still up 1.9%. The S&P 500 is sporting a 4.8% gain, while the Nasdaq was up 8.9%. For the Dow, that's a big drop from a peak 2012 gain of 8.7% on May 1. The S&P 500 was up as much as 12.8% on April 2. The Nasdaq has been up as much as 19.9% on March 26.

Markets for the week



5/25/2012

5/18/2012

% chg.

YTD chg.
Dow Industrials

12,454.83

12,369.38

0.69%

1.94%
S&P 500

1,317.82

1,295.22

1.74%

4.79%
Nasdaq 

2,837.53

2,778.79

2.11%

8.92%
Russell 2000

766.41

747.21

2.57%

3.44%
Crude oil 

$90.86

$91.48

-0.68%

-8.06%
(per barrel)











U.S. Dollar Index 

82.52

81.42

1.35%

2.49%
10-yr. Treasury

1.75%

1.70%

2.53%

-6.73%
Gold

$1,568.90

1,591.90

-1.44%

0.13%

Crude oil and gold move higher
Crude oil (-CL) was up 6 cents to $90.72 a barrel. Brent crude was up 35 cents to $106.30 a barrel.

The national retail price of gasoline fell to $3.666 a gallon, according to AAA's Daily Fuel Gauge Report. That's down 6.9% from the peak in early April

Gold (-GC) settled up $11.40 to $1,568.90 an ounce. For the week, gold was off 1.4%. It's down 5.5% for the month and flat on the year.

Silver settled up 22.9 cents to $28.386 an ounce. But the metal fell 1.2% for the the week and is off 8.5% for the month.

Copper finished up 1.95 cents to $3.448 a pound. It fell 0.6% for the week and is down 10% this month.

Interest rates were lower, with the 10-year Treasury yield falling to 1.745% from 1.759% on Thursday.

Energy prices -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Crude oil (-CL)

$90.86

$90.66

-13.36%

-8.06%
(per barrel)











Heating oil (-HO)

$2.8329

$2.8257

-11.03%

-2.79%
(per gallon)











Natural gas (-NG)

$2.5680

$2.6470

12.39%

-14.08%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.8290

$2.8193

-9.46%

6.46%
(per gallon)











Brent crude 

$106.83

$106.55

-10.63%

-0.51%
(per barrel)











Retail gasoline

$3.6660

$3.6760

-3.93%

11.90%
(per gallon; AAA)












European stocks finish; Spain is propping up a troubled bank
European stocks were mostly higher. A big reason was that Spain didn't announce its aid for Bankia until after European stocks close.

Another reason: German Chancellor Angela Merkel is willing to consider a eurozone-wide bond issue to shore up Greece and other countries. But that's not an easy thing to accomplish. It would require a change in Germany's constitution.

Europe has weighed on U.S. stocks as well. The biggest contributors to the Dow's loss today  were Caterpillar (CAT), IBM (IBM) and Boeing (BA), which combined to subtract some 30  points from the blue-chip index. All derive at least 40% of their revenue from outside the United States. All are getting hurt by Europe's problems.

About 32% of IBM's 2011 revenue was from Europe, the Middle East and Africa.

There is fatigue building about Greece. Consider this nugget in a Berlin speech today from Jeurgen Fitschen, who will become co-chief executive of Deutsche Bank (DB) next week: "Greece is the only country, I feel, where we can say 'it’s a failed state,' it is a corrupt state, corrupt as far as its political leadership is concerned and obviously other people had to be willing to support this."

Icahn gears up for a fight over Chesapeake
Carl Icahn has become a billionaire being a major pain to corporate managers. He's at it again, and this should be good theater.

The activist shareholder disclosed today a 7.56% stake in Chesapeake Energy (CHK). In a letter included in a Securities and Exchange Commission filing, Icahn told Chesapeake that the company's needs to become more shareholder friendly.

"If you continue to arbitrarily refuse the request we have made for shareholder representation," he wrote, "We, as activists, will immediately take whatever 'actions' we feel are necessary to protect the value of this company."

Chesapeake shares were up 23 cents to $15.81 and 10% for the week as reports grew that Icahn was building a big stake in the natural-gas producer.

The awfulness of the Facbook IPO
Just how bad has the Facebook IPO gone? Well, the stock closed its first full week of trading down 17.4%.

According to Bloomberg News, the decline exceeds the 10% drop by MF Global Holdings (MFGLQ) in its first five days as a public company. (The company is now in Chapter 11 bankruptcy.) Visa (V) did best among the biggest deals, rising 45%.

Facebook and Morgan Stanley (MS), its lead underwriter, have faced criticism for boosting the number of shares sold in the IPO by 25% last week to 421.2 million. They also boosted the asking price to between $34 and $38 from $28 to $35.

"Raising the price and number of shares was clearly a mistake," said Michael Shaoul, chairman of Marketfield Asset Management in New York.

The first day of trading was disrupted by the "poor design" of the Nasdaq’s software for IPO auctions, Robert Greifeld, CEO of Nasdaq OMX Group (NDAQ). Nasdaq's shares are down the chief executive officer of the exchange operator, said on May 20.

Claims by top market makers against Nasdaq over the Facebook mess will probably soar past $100 million, according to Reuters. Citigroup's trading desk was hit with $20 million in losses because of Nasdaq's problems. according to CNBC's Kate Kelly.

And there were reports that Morgan Stanley and Goldman Sachs (GS) were supplying shares to investors who wanted to short the stock. An odd thing to do when Facebook is your client.

Morgan Stanley told its brokers Thursday that it will adjust thousands of trades to ensure outstanding limit orders to sell will be filled at no more than $42.99 a share for Facebook stock from last week's botched IPO, Reuters reported.

Remarkably, Nasdaq's shares, up 26 cents to $22.11, are off 4.1% since May 17, the day before Facebook started trading. Morgan Stanley shares are down just 21 cents, or 1.5%, in the same time frame. Morgan Stanley shares were down 6 cents to $13.35 today.

Short hits from the markets -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0800%     0.090%

-11.11%     700.00%
5-year Treasury note 

0.762%     0.773%

-6.04%     -8.19%
10-year Treasury note

1.745%     1.759%

-8.88%     -6.73%
30-year Treasury bond

2.846%     2.847%

-8.46%     -1.49%
Currencies











U.S. Dollar Index

82.523     82.487     4.66%     2.49%
British pound

1.5672     1.5674     -3.51%     0.86%
(in U.S. $)

                   
U.S. $ in pounds

£0.638     £0.638     3.64%     -0.85%
Euro in dollars

$1.25     $1.25     -5.50%     -3.38%
(in U.S. $)

                   
U.S. $ in euros

€ 0.799     € 0.797     5.82%     3.50%
U.S. $ in yen 

79.81     79.59     -0.24%      3.51%
U.S. $ in Chinese

6.37     6.34     1.04%     0.64%
yuan

                     
Canada dollar

$0.972     $0.974     -4.11%     -0.96%
(in U.S. $)

                   
U.S. dollar 

$1.030     $1.026     4.29%     0.97%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,568.90

$1,557.50

-5.73%

0.13%
(per troy ounce)











Copper (-HG)

$3.448

$3.429

-9.96%

0.35%
(per pound)











Silver (-SI)

$28.3860

$28.1570

-8.48%

1.69%
(per troy ounce)











Wheat (-ZW)

$6.8000

$6.6300

3.90%

4.17%
(per bushel)











Corn (-ZC)

$5.7850

$5.785

-8.79%

-10.52%
(per bushel)











Cotton 

$0.7272

0.7249

-18.66%

-20.68%
(per pound)











Coffee

$1.7025

1.692

-5.18%

-25.87%
(per pound)











Crude oil (-CL)

$90.86

$90.66

-13.36%

-8.06%
(per barrel)










 

73Comments
May 25, 2012 1:49PM
avatar

There is so much going on economically in the world, the we need a really good business man to handle it all. Sorry ... Obama just doesn't have the credentials or the biz background. Unless all of this is handled by someone with real saavy and economic knowhow, we will fall into the abyss with everyone else.

Obama, Biden, Clinton, Pelosi ...... that is a JOKE of a group to help this country out of this economic crisis.

May 25, 2012 2:22PM
avatar

This is truely pathetic. Every day the market is affected by something other than good company performance, innovative product development, smart economic strategies, or wise investment by the crowd at Wall Street. The government has no clue as to a strategy. In fact, many in the government departments are former Wall Street board members, etc. Talk about putting the fox in the hen house!!

We seem to be dancing to a tune played by European "worries", housing failures, unemployment figures rising, and the failure of a plan in Government to fix anything. People who retired and took the advice on so-called "financial planners", have lost their shirts, and in some cases, their homes!

What's it going to take to stop this financial suicide? Perhaps we should try to find some people with actual knowledge about finance, and see if we can convince them to take over the problem? Perhaps starting to manufacture peoducts here, rather than in foreign countries? Also, we might consider putting people to work on public works projects....Lord knows there's plenty that needs to be fixed here....roads, bridges, dams, water service systems, etc. We might even think of putting jailed prisoners to work, rather than leaving them in prisons, at taxpayer costs, watching TV and lifting weights. It's not "rocket science" to fix many of the things that are wrong....we might start by arresting the Wall Street thieves that are still robbing millions and billions from average people...and still living the good life while they continue to walk free! When will it truly be "Enough Is Enough"?

May 25, 2012 2:40PM
avatar
Based on the all time high, and 3% annual inflation, the DOW should be at around 16k. This may be a shallower depression, but it is certainly not recovery. Time to get rid of this shovel ready president.
May 25, 2012 3:12PM
avatar
Why don't we stop having Europe or Greece worries and start worrying about the USofA.  This is getting just a little bit to much, this excuse about Europe and/or Greece.
May 25, 2012 1:40PM
avatar
The leeches are feeding on each other today so as to divert attention away from the bond market which they will start pillaging in the near future. The 3:00 sell off will take place today as usual.
May 25, 2012 2:15PM
avatar

Consumer confidence strenghthens on planet MARS ! Market is in FREE FALL ! See you as we go off the CLIFF !  TAKE YOUR MONEY AND RUN  !

May 25, 2012 2:40PM
avatar
I regret every penny I ever put in a 401(k).  I am 65 now, and ready to take money out.  Every dollar in my 401(k) or TSA is worth 70 cents.  First I pay 20 cents in federal tax.  Then I pay 6 cents in state tax.  The rest goes to the outrageous fees and surrender charges the mutual fund company gets.  The money in my crappy, nearly zero interest savings account will never go down.  I will never pay taxes on it, and I can do whatever I want to with it.  If you are young and still working, do not put your money in the stock market.  It is a system designed to remove wealth from the middle and lower classes and redistribute it to the already wealthy.  Put your money into savings accounts, CD's, bonds or other financial instruments that can never lose money.
May 25, 2012 3:55PM
avatar
We gave it a try but to no avail...At 1545 hrs they accelerated once again...Nothing was going to derail these scumbags from manipulating this market down today...Oh well....Cheating still pays on Wall Street....Hope everyone has a great weekend and before you enjoy your bbqs and festivities, take a moment and say a prayer and a thanks to our heroes that gave their lives so we are able to enjoy parties, bbqs and the rest of the freedoms that they provided us...And yes, I am a retired soldier (26 years) and I am scared to death that Obummer may get reelected, not only because we will lose a lot of our retirement benefits but because life in general will go to hell in our great country. And once again, if Romney wins, the Dow will go to 15,000 and most people here on the floor know it well...Take that to the bank....Have a great weekend all.
May 25, 2012 2:42PM
avatar
This country sucks for small service buisnesses!
May 25, 2012 4:18PM
avatar
If Spain has to be bailed out, the next domino to fall will be Italy...the ECB/EFSF doesn't have the means to provide financial lifelines to countries that large, does it?  Portugal was expected to need more funding, also, but that's nothing compared to those two...Greece is just the tip of the iceberg, IMO
May 25, 2012 4:10PM
avatar
TOG, my old pop was in WW2 and Korea.
My uncle was in WW2.
My dads uncle was a flyer shot down in WW2.

Nope, I never forget.   These brave folks risked
their all to keep us free.  They are always in my
heart.

Peaceful and prosperous weekend to you all.
Highest regards, LOM

May 25, 2012 4:22PM
avatar

Treasuray Department came out with the real numbers    obame is spending almost  $10,000,000,000.00

 

Dollars  each day    Spin  that  One Time     He is so full of it

May 25, 2012 5:49PM
avatar
Nobody deserves our respect more than anyone who puts their life on the line for our freedoms, and nobody deserves to be honored more than those who have sacrificed their lives for the same!
God Bless each and every one of them!!!!!!
May 25, 2012 4:56PM
avatar

GDP    Lets see   This is really hard to understand    The Government does not have any money.

 

Stop spending now 

May 25, 2012 2:44PM
avatar
I would assume "Ruler" Obama has asked Hillary to run with him by now.
Makes sense to do that since the last guy was on the ticket since Obama had no experience.
The only way to win this time still would be to get someone with some experience to run with him. 

avatar
The stock market is a MIRAGE!!   You just haven't figured it out yet!!   Your dollars are worth .12 cents in real money!   It doesn't matter if your a Republican or a Democrat, both parties are responsible!  Congress and the President spend money we don't have, on things we don't need, to impress countries we don't even like!   Thats the definition of a $100 Millionaire!  Neither party can agree on anything if its not their idea so get over it!  Both parties spew BS, and you keep buying it!   What this country needs is a President and a Congress that really care about the course this country is on and work on rebuilding it instead of trying to patch it and pass it on to the next generation.  So...call yourself a Republican or a Democrat...I would prefer to just be called an American, one who gives a crap about where this country is going!    Good day!
May 25, 2012 3:54PM
avatar
long beach   why dont you try to tell everyone what to do with their own money    thats what you lib dems are good at isnt it      and thats the only thing
May 25, 2012 6:22PM
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"MisterKyte .. maybe this POTUS will think "Mission Accomplished" .. and the economic down turn (Great Recession 08) is just a little "bump in the road" like the last POTUS? "

Doug, "08 was a bump in the road. The trouble is that the current POTUS has spent the last 3 1/2 years turning a "bump" into a sink hole of epic proportion!  And Ya, he's just arrogant enough to say "Look! Mission Accomplished!"
May 25, 2012 4:56PM
avatar
Jimie Dimon, JPMorgan Chase CEO, is schedule to testify before the Senate Banking Committee on June 7th.  That ought to stir up some gasping and groaning on Wall Street financial markets.
May 25, 2012 3:23PM
avatar
The call came at 1415 hrs and that's all she wrote....Like we said then, the whisper was to get us down 100 points or more and they are well on their way.....Not hard to do with this low volume and as many as these scumbags that we have here today, like they don't have anything else to do...Once again they are stealing from us all because they have a license to do so...More after the close.
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[BRIEFING.COM] The headlines generally favored Tuesday being another good day for the stock market.  Instead, it was just a mixed day with modest point changes on either side of the unchanged mark for the major indices.

For the most part, the stock market was a sideshow.  The main trading events were seen in the commodity and Treasury markets, both of which saw some decent-sized losses within their respective complex.

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