US stocks fluctuate on eurozone contagion fears

By Andrea Tse

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“Desks are half-staffed, or there’s just a skeleton crew at most desks and things are quiet" ahead of the Memorial Day holiday weekend, said Lawrence Creatura, portfolio manager at Federated Investors.

Stocks were falling alongside the euro as the currency retreated amid worries that Spain's wealthy autonomous Catalonia region was losing access to the capital markets. Catalan President Artur Mas said the region needs more financing help from Madrid because it is short on options for refinancing debt in 2012.

Meanwhile, shares of the partly nationalized financial institution Bankia were halted ahead of a board meeting to discuss the final amount of aid it will require from the Spanish government, which could soar past the 14 billion euros in loan loss provisions mandated by the government.

At the same time, the Financial Times reported that some of Europe's largest fund managers were dumping their euro assets on Greek uncertainties.

London's FTSE settled up 0.03%, and the DAX in Germany closed up 0.4% amid signs that consumer confidence was stabilizing in the country.

Another bright spot in the markets ahead of the long weekend was the far-better-than-expe​cted final read for the Thomson Reuters/University of Michigan index of consumer sentiment in May, which increased to 79.3 -- the strongest since October 2007 -- from the preliminary read of 77.8, most likely due to falling gasoline prices. Economists on average were expecting a repeat the previous read.

"Next week's avalanche of data will offer an important test" for the Federal Reserve to see whether economic data can soften "just enough" in the coming weeks to provide the necessary cover for more monetary easing, Societe Generale researchers said. Approaching the midpoint of the year, the "fiscal cliff" is becoming a growing source of concern for the Fed, they said.

The Hang Seng index in Hong Kong settled up 0.3%, and Japan's Nikkei closed up 0.2%.

In corporate news, Facebook (FB) shares were retreating again. Claims by top market makers against the Nasdaq over the blemished Facebook initial public offering will probably soar past $100 million, according to Reuters. Knight Capital (KCG), Citadel Securities, UBS (UBS) and Citigroup's (C) Automated Trading Desk, and other traders continue to deal with thousands of customer order complications, the report said.

Morgan Stanley (MS) 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, the company told its brokers Thursday, according to several who listened to the call, Reuters reported.

VeriFone Systems (PAY), the electronics payment technology company, on Thursday forecast non-GAAP earnings of 68 cents to 70 cents a share for its fiscal third quarter, ending in July, on revenue ranging from $495 million to $500 million, below analysts' expectations for revenue of $502.2 million with profit of 70 cents a share.

Infoblox (BLOX), the network-automation company, posted third-quarter revenue of $43.4 million, above analysts' estimates of $41.4 million. Excluding items, Infoblox earned 5 cents a share, beating the Wall Street earnings target of 1 cent a share.

Semtech (SMTC), the semiconductor company, said it expects to post adjusted earnings of 37 cents to 45 cents a share on sales of $146 million to $154 million in the second quarter,  while analysts are forecasting earnings of 41 cents a share on sales of $149.1 million.

Chesapeake Energy (CHK) shares were gaining upon rumors that activist investor Carl Icahn is amassing a big stake in the energy company and a separate CNBC report that BlackRock (BLK) is bumping up its Chesapeake stake to 4 million to 5 million shares from 1 million shares.

Creatura of Federated Investors thinks that deal activity will pick up again because "the price is right," sellers have more "realistic attitudes" about the true valuation of their companies, and buyers are "desperate" for ways to grow.

The benchmark 10-year Treasury was up 9/32, lowering the yield to 1.745%, and the greenback was up 0.07%, according to the dollar index.

The July crude oil contract was up 6 cents at $90.72 a barrel and June gold futures were rising $8.50 to $1,566 an ounce.