Stocks fall as regional manufacturing slows

The Philadelphia Fed gives a weak report on factory activity. Initial unemployment filings remain unchanged. Facebook's IPO price range is finalized.

By TheStreet Staff May 17, 2012 7:41AM

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


Updated at 10:38 a.m. ET

The major averages were slipping Thursday after the Philadelphia Federal Reserve gave a worse-than-expected read on regional manufacturing activity.


Spain raised 2.5 billion euros in a debt auction, but its borrowing costs rose, highlighting worries about the country's economy and raising concerns about Greek debt contagion.


The Dow Jones Industrial Average ($INDU) was down by 25.6 points, or 0.2%, at 12,573 but paring losses. The S&P 500 ($INX) was down by 4 points, or 0.3%, at 1,321. The Nasdaq ($COMPX) was falling by 12.6 points, or 0.4%, to 2,861.


In domestic news, the Philadelphia Federal Reserve said its general economic index fell to minus 5.8 in May from 8.5 in April. It was a big miss, as economists surveyed by Thomson Reuters expected the index to rise to 10.

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The Conference Board's report of leading economic indicators for April was also a disappointment. The report showed a decline of 0.1% in April after a gain of 0.3% in March. Economists had forecasts a rise of 0.2% for last month. The Conference Board attributed the drop to rising jobless claims and falling housing prices.

The U.S. Labor Department reported that initial jobless claims were unchanged at a seasonally adjusted 370,000 in the week ended May 12. Economists had forecast a fall to 365,000.


The four-week moving average fell to 375,000 from 379,750 in the previous week.

Continuing claims for the week ended May 5 were 3.265 million, up from the preceding week's level of 3.247 million. 

London's FTSE was down 1.5%, and the DAX in Germany was falling 1.2%.

Spain's borrowing costs rose amid fears about the health of its economy and banking system, as well as worries about Greek debt, though its latest debt auction went relatively smoothly, with the country raising its maximum target of 2.5 billion euros ($3.2 billion).


For bonds maturing in January 2015, Spain had to pay an interest rate of 4.373%, up from 2.89% in April. For bonds maturing in April 2016, interest rates rose to 5.106%, up from 3.374% in March.


Spain's gross domestic product shrank by 0.3% during the first quarter, matching its fourth-quarter decline. The final figure matched its preliminary estimate.


"Spain has formally slipped back into recession," Societe Generale analysts said.


Debt contagion fears persisted as the European Central Bank indicated that it will temporarily halt lending to some Greek banks to reduce risk exposure there. ECB President Mario Draghi said in a speech Wednesday in Frankfurt that while the central bank's preference is for Greece to stay in the single-currency bloc, the country might have to break off from it.

Meanwhile, the leftist Syriza coalition, which still dominates the public opinion polls in Greece, remains adamant about loosening the tough austerity measures Greece has had to abide by as part of its European Union and International Monetary Fund bailout deal.

In Asia, the Hang Seng Index in Hong Kong fell 0.3% and Japan's Nikkei average finished up 0.9%.


The benchmark 10-year Treasury was rising 3/32, diluting the yield to 1.754%. The dollar was flat, according to the dollar index.


The June crude oil contract was up 54 cents at $93.35 a barrel. June gold futures were rising $31.10 to $1567.70 an ounce.


In corporate news, CNBC reported that the price range for Facebook's initial public offering has been finalized, citing a source close to the situation. The report says that while Facebook could still price above the expected range, Securities and Exchange Commission regulations forbid companies from pricing too far above what they had disclosed to the public. That means the rule sets a maximum price for Facebook at roughly $45, according to the report.


Wal-Mart Stores (WMT), the world's largest retailer, reported first-quarter earnings of $3.74 billion, or $1.09 a share, up from year-earlier earnings of $3.39 billion, or 97 cents a share. Analysts, on average, were looking for a profit of $1.04 a share in the April-ended period on sales of $110.54 billion. The retailer announced Wednesday that it anticipates second-quarter earnings of between $1.13 and $1.18 a share; analysts are expecting $1.16 a share.


Sears (SHLD) reported first-quarter profit of $189 million, or $1.78 a share, a reversal from a year-earlier loss of $170 million, or $1.58 a share. The latest quarter included about $200 million of gains from the sale of some U.S. and Canadian stores. Sears posted an adjusted first-quarter loss of 31 cents a share, compared with an adjusted year-earlier loss of $1.34 a share. The retailer was expected by analysts to post a quarterly loss of 67 cents a share.


Agilent Technologies (A) announced it is making its largest acquisition to date of Denmark cancer diagnostic firm Dako for $2.2 billion.


Limited Brands (LTD), the specialty retailer, whose brands include Victoria's Secret and Bath & Body Works, said Wednesday it expects second-quarter earnings of 40 cents to 45 cents a share. Analysts polled by Thomson Reuters were looking for a profit of 50 cents a share in the July-ending quarter. For the full year, Limited said it expects earnings of $2.63 to $2.83 a share; Wall Street's current consensus estimate is $2.83 a share.

May 17, 2012 4:02PM
Gary Myers...

This is WHY democrats are POOR capitalists, like you they don't know what to do with capital.  They wouldn't want to try to create more wealth or create business' or jobs....  They have no drive, no ideas, and clearly idea how to do the job.

We can see the results in the White House now....  CLUELESS...  We need someone that can create growth, and get America moving in the right direction.    We have had enough of Taxing, Debasing, Spending and Borrowing...
May 17, 2012 4:01PM

I did great today with my 401 M(Matress) investments. How did all of you imbeciles do today? I LOVE IT!



May 17, 2012 2:11PM
Crap.......... I guess Lord Voldermort moved to Greece and doubled the market negativity.
May 17, 2012 2:03PM



You really don't have a clue. 

May 17, 2012 1:30PM



Jar-- You've switched teams?


Ya, he got a huge signing bonus with his new team and they only had to give up a player

to be named later and a 5th round draft pick.

May 17, 2012 1:26PM



If you had 100 million, would you want to hold that 100 million in:

If I had 100 million I would be so happy that I wouldn't care if I never made a dime on it.
Thats more than my whole family could spend in a lifetime.  Even if I only got 1% interest
on it that would be 1 million dollars a year.
I wouldn't worry about getting richer.
May 17, 2012 1:22PM




You gotta love that Trickle down, if you are a 1%'er!


Not so good if you are one of the 99% unemployed and looking for a job!


You've just got to know where the trickle comes out of the bottom and put your

bucket there.  After a while you just might catch enough of the trickle to make it

work for you.


You just have to look at the definition of trickle and you can understand why

trickle down economics doesn't work.

May 17, 2012 1:22PM
The stock market will remain the least risky game in town.   Ask yourself this...

If you had 100 million, would you want to hold that 100 million in:

US Treasury bonds?  Greek Bonds?  Spanish Bonds?  Corporate Bonds?
Gold/Silver/Platinum?  Oil?  Or any other commodity?
Real Estate?
Euros?  Dollars?  Any other Currency?

Or would you rather own stocks?

With governments everywhere unable or unwilling to live within their means, the risk of holding bonds, cash or commodities, or illiquid assets are too great.  Stocks is the only real option left.
May 17, 2012 12:44PM

Previous bubbles, were in periods in which people's optimism was way over the top.  Could you point to over optimistic people in this situation? 


We are talking about the optimism of dotcom, when income for the companies would have to go up many 1000% for the PE value to be legit.  Or the housing bubble, when people thought the price would never go down.  Or the savings and loan bubble.  Or the great depression when shoe shine boys were buyings stocks. 


PE ratios are in line, no sector going off.  (okay groupon and facebook dont make sense to me, but not everything has too make sense to me)

May 17, 2012 12:38PM

Once a bum, always a democrat...


Yes, no division in this counrty at all... and if it is.... it only comes from the left...





May 17, 2012 12:32PM
Dharm - good to see you on the board today.  I always enjoy your insight.  Good luck on your deck.  Cheers.
May 17, 2012 12:29PM
Hello - New opportunities, freedom and financial growth
Hello - Fiscal responsibilities

And, who do you think will bring this about?  The Republicans have not shown fiscal responsibilities in over 10 years.
May 17, 2012 11:54AM

European Socialism has failed.

Obamnean Socialism will also fail.

It is just a matter if we elect Mitt and it fails that way----OR

We reelect Obama and the whole country goes the way of Greece!!!!!

May 17, 2012 11:50AM
When I was a kid I had no air conditioning, black and white TV, and an old hand me down bike. I picked vegetables from the garden and ate fruit from the trees. Looks like we are all headed back to the good old days. A Mc Donalds meal was an uncommon treat my parents could barely afford.
May 17, 2012 11:46AM

Its amazing how the market moves up and down with any news on the EU when substantially the Greece and Spain issue just continues to spiral downward. Wishing and Hoping are not a plan, nor is burying your head in the sand.

If the people of a country do not have the will- which is difficult to obtain after years of leadership basically lying to the people- then the problem will not be solved and we can all use their money as heating fuel.

May 17, 2012 11:43AM
Hey Dharma,

May 17, 2012 11:37AM
The greatest obstacle we face is ourselves.

Got a deck to build.  Have a great day.


May 17, 2012 11:35AM
If there is a run on the bank that holds your mortgage, do you still have to pay it if your checking account there is frozen for months?

 And what if a bank collapses and nobody buys the assets at the fire sale. Do you have to cough up the entire amount of the loan as part of the bankruptcy deal --or is it forgiven?

May 17, 2012 11:31AM
Waste your energy today, on things you cannot control.  Why not  use the angst to start something new,  a career, a new way of seeing your life?  Change usual comes into action when we are "sick and tired of being sick and tired."  Until then, we are stuck in a vicious cycle of blame.

Opportunity rarely comes easy.  We have to see it.  That requires confidence in ourselves and our abilities, especially to grow and change.  Nothing is static.  Our bodies.  This planet.  Everyone and everything is changing all the time.  This is life.  Tap into this, instead of being afraid of it, work with it, instead of against  it.  This is were personal power is found.


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