US stocks fluctuate on eurozone contagion fears

Europe's largest fund managers are dumping euro assets. A key index of US consumer sentiment rises sharply. Spain's Catalonia region taps Madrid for help. Facebook's market makers lose $100 million.

By TheStreet Staff May 25, 2012 7:44AM

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


Updated at 1:05 p.m. ET


Wall Street was wavering Friday, with investors unable to shake off fears of a deepening eurozone crisis.


The Dow Jones Industrial Average ($INDU) was down by 42.3 points, or 0.3%, at 12,487. The S&P 500 ($INX) was down 0.6 points, or 0.05%, at 1,320. The Nasdaq ($COMPX) was falling by 2.7 points, or 0.09%, to 2,837. The index remains on track for its biggest monthly percent loss since May 2010.


Among the 30 Dow stocks, 16 were falling, led by JPMorgan Chase (JPM), Caterpillar (CAT) and Boeing (BA). Basic materials, capital goods and transportation were the hardest hit sectors.


"Given that everybody made money earlier in the year, they’re figuring, 'What I’ll do is, given all this risk, let me take some stuff off the table and I’ll go to the beach,'" said Doug Roberts, a chief investment strategist at ChannelCapitalResearch.com.


Trading volume was low as many investors stood on the sidelines, but the VIX fear index was creeping up.


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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.


"The ripple effects -- that’s what everybody’s worried about with Europe," Roberts said.

He thinks if European leaders were able to come up with a temporary six-month fix for eurozone debt contagion problems amid their ongoing meetings, it could be enough to get the markets "back to the races."


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-expected 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.


128Comments
May 25, 2012 1:28PM
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I'm going to agree with DLH and LOST......

except that Europe part LOE....

 

Nap time.....zzzzzzzzzzzzz

                                zzzzzzzzzzzz

                                          zzzzzzzzzzzzz

May 25, 2012 1:25PM
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Barack Obama in 2012!

 

Chris Van Hollen in 2016 & 2020!

 

Long live Christian Socialism!

May 25, 2012 1:21PM
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Right Bob/fla.....Only "safe" game in town/globe...I don't play any of that..

 

And have been increasing positions in Gold.....Seem's to be running back...I wonder why ?

 

Appears many of the posters have left for the weekend,seem's quiet,...That's refreshing.

 

And I'm hoping the WS traders are leaving early too, so as to only leave us 30-40 down...?

That would make for a nice long weekend...

May 25, 2012 1:21PM
May 25, 2012 1:18PM
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Half the idiots that come here everyday can't even find this article. LOL That's a good thing!
May 25, 2012 1:12PM
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BJMJR1

 

and worse but not least,

 

 

Scratching my boney head on this one............ O, hey.......... this story blows.

May 25, 2012 1:10PM
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Europe's problems will disappear, like ours will when we balance the budget and pay off our debt.

You cannot Tax, Spend, Borrow and Debase you way to prosperity no matter what "57 States" and his donkey minions tell you...

Government spending is not the answer, its the problem....   In a nut shell if he government "Stimulates" you by giving you $600 (like the W did) and then hands you the payment book for $700 are you stimulated?   

Obama is more clueless than Carter, more corrupt than Nixon, and plays golf/vacations more than Ford...  He has  to go!
May 25, 2012 1:09PM
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Well said Leprechaun....How true,how true.........As you probably already know I'm one of "those retired" investors....And I do come to MSN, for information,also run 1 "watchlist" here on front page.

There are some other investors here, but maybe many might have a 401K, if they work??

401K albeit are investments, but nothing like being a gut wrenching trader. Or someone Active?

 

CGT1......Whoaaa nelly, let's not talk about a 3-3:30 drop yet...

I've got 12 on the Watchlist (10 are ours).

8 (green)are up enough, where a 100pt. negative close, couldn't put them in the red.

2 are oil/Ngas related and are up because of Carl Icahn and BlackRock investments...

See above article......Thank you Andrea...For the Information. 

 

May 25, 2012 1:06PM
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Some Moderator musta fell asleep with their forehead on Delete button, or is that Censor button? Luckily I save my posts and am heading over to Yahoo now - buy (pun intended) guys!
May 25, 2012 1:06PM
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What makes the good old USA even more sadder is that, we will go to every other country in the world to fight a war for anything what so ever, that doesn't even qualify war means, we will destroy there country and then help them rebuild it after we are done to be there friends again. Now we want to take the old people, poor people and even people that are working but there companies will not hire them full time to give them health benefits off of Medicaid, how sad is that, and worse but not least, most of these people pay there taxes and earned it and now we are taking it away from them. I feel sorry for all that don't have health care and can't afford to get it and work hard for it ever day because the good old USA allows employers to work people right up to the cutting point of hours before giving them health benefits.
avatar

Quote

 

Actually, however, the news is even worse: No one is going to invest in Facebook shares today if its price will be 30% lower in five years. So, in order to entice someone to invest in it today, Facebook needs to offer a handsome return. Assuming that its five-year return is equal to the stock market’s long-term average return of 11% annualized, Facebook shares currently would need to be trading at just $13.80.

 

End Quote

 

What did P.T. Barnum say???

 

Oh yes there is a sucker born every minute. Seems like they all have brought face book at twice it's going price.

 

May 25, 2012 12:53PM
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The Dollar is the reserve currency of the Free(?) World...As such it is the safest harbor in a financial storm. This is evidenced by the 30 Year T-Bond yielding 2.6% which is BELOW even the made up inflation figure the US Govn't advertises (3.1%). The reason foreign govn'ts (China and many others) buy this debt is SAFETY. Now, THINK...Come on, it's really not that difficult....Would YOU invest your money in a 30 year debt instrument that actually loses you money to inflation? Come on...Yes you would... IF IT WAS THE ONLY GAME IN THE WORLD...And it is, at least now it is. The problem, and one that is basically unsolveable, is that The Bearded Clam, Barry and Tiny Tim will continue to print dollars to save their jobs (very short term thinking) and this will result, soon, in an inflationary spiral that will make Jimmy Carter's stewardship of the US economy look like the work of an economic genius. The 30 Year Treasuries will be basically worthless and this will result in the rest of the world looking for a NEW World Reserve Currancy....Then you wave bye-bye to Dems vs Repubs... As Billy Joel wrote..."And we will all go down together"...  
May 25, 2012 12:46PM
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Sid, there are a few here quite 'knowledgeable'...'ol school.  No, most here ... other than a very few, do not invest in the 'market's' and I entirely acknowledge, that.  They talk to themselves most; and, that is readily discernible.  It is unfortunate that most 'blogs' turn is some type of 'social' advent in venting this or that...and, most of those are in some sort of 'denial' of some sort or the other and professing an incredible intelligence that they look up on the net.  I will leave it at that. 
May 25, 2012 12:44PM
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Wall Street doesnt catch on!! Investors dont care about Europe! Never did, never will, never cared about the story!! It's a maniulation thng with banks who got on thw wrong side of the ocean when they shuld have stayed here. They want investors to bail thenm out!!!
May 25, 2012 12:37PM
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Not a whole different start than the last few days....Very low volume and plenty of scumbags; manipulators in control, at 1200 hrs they called to accelerate so now we are going down slowly but surely....It's friday before a long weekend, both things go against us...Cheaters will want to steal as much as possible before they leave...The Europe excuse is getting so old.....Oh well, more later.
May 25, 2012 12:05PM
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My point exactly, Sid S....Agree 120%

 

BTW....Most of the equities are doing quite well today, maybe it depends on one's investments...?

 

Facebook(FB) not so great......down over a buck or -3%+.

Such a mess, such a mess.....

May 25, 2012 12:03PM
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My point exactly, Sid S....Agree 120%

 

BTW....Most of the equities are doing quite well today, maybe it depends on one's investments...?

 

Facebook(FB) not so great......down over a buck or -3%+.

Such a mess, such a mess.....

May 25, 2012 11:49AM
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Don't worry. Our politicians will let all decisions occur at the last possible minute when they are forced to do something. There will be negative effects leading to that time but they will declare victory by having staved off another doomsday due to their great leadership.

 Then they will go on with not leading until the next possible self made crises that only they can declare victory.

May 25, 2012 11:48AM
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Sorry you guys, I have to bring this up....Carp aren't all that bad eating, "smoked", but they are kind of bony and I don't like the scaling...Ancient fish.

Better yet are White or Lake Suckers, smoked they are delicious, but most white people just don't eat them...Along with Bullheads, unless they are called...Catfish.

 

But in Asia /Japan the Carp(goldfish) are revered, AKa, Koi....

Same as in some ponds here in the U.S.

May 25, 2012 11:39AM
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When people or persons who control money in general F up, they F up big time and everyone suffers and these folks are what we consider the guardians of wealth and prosperity? Now I really believe in what Obama is trying to say about leveling the playing field and equally sharing the wealth, cause if this is what the top of the tier does, the financial world might as well give the job of managing to a drug dealer or crack head who knows how to count, spend and invest without suffering any losses, except when he gets caught. Sound like the same story applies to wall street, bankers and the lot.
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