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 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.


May 17, 2012 11:29AM
Watching as much as my stomach could handle of MSNBC last night, 3 shows in a row- the main theme, from opening second one to almost the end of the show----


According to Matthews, Madcow and Ed, everyone wants to know"

1) HOW did Bain become so successful ?
2) Where did the money come from?
3) Where there any illegal activities involved ?
4) How manny people dids Romney fire ?

Matthews was ALL over "vetting" Romney.

Hmm , isn't this more than a little interesting ?
Lets see--
The very same "journalists" 4 years ago:

1) Where was Obama born ? WHO CARES !
2) College Transcripts ? WHO CARES! 
3) Why does he have multiple names? WHO CARES !
4) What name did he use in college for admissions ? WHO CARES !
5) Was he a "foreign " student back then in college? WHO CARES!
6) Why does he have 2 Social security Numbers ? WHO CARES !
7) What does his thesis contain? WHO CARES ?
8) What's his involvement with convicted swindler Tony Rezko ? WHO CARES ?
9) Terrorists Bill Ayers and Bernadine Dorns-? WHO CARES ?
10) What are his social views/agenda? WHO CARES?
11) Is he even at least a  capitalist? WHO CARES ?
12) What was his record in the Senate ? WHO CARES?
13) Rev Wrong, the American hating racist- 20 year relationship with OB - WHO CARES?
14) Where did Obuma get HIS money? WHO CARES?
15) How did Michele obuma get a cushy job in a legal firm ? WHO CARES ?
16) How much DRUGS did OB really do (he admits it in his masterpiece- Dream of finding Who my Daddy Is) WHO CARES?
17) What's his involvement with super one percenter /commie George Soros ? WHO CARES !

I really don't think , Obuma's getting a free pass this time.
Of course the Commie media (MSN, MSNBC and CNN) will NEVER ask those questions but here's a surprise.
Americans REALLY want to know this time.
It's out there and as long as The MNBC are looking into Romney piehole, it goes both ways.

Gee, I wonder who REALLY has the most to hide?

May 17, 2012 11:27AM
Does anyone really believe the first Americans were these daisy wearing Davey Crocketts with a twinkle and a smile.  The Original settlers were tough **** flat bellies that shot and asked questions later. If you set foot on their property you could be dead.  To travel thousands of miles in all weather, threats from wild animals,  native Americans on the prowl, and most of all white bandits who would kill you for your shoes.  This was how this America was created and what made it great.  It most definitly wasn't some mealy mouthed talk show host who made millions telling people how to live a politically correct life.  I can't wait for the "real" world to make its comeback!.
May 17, 2012 11:27AM
The Media & Washington can spin the numbers anyway they want to make things look good.  All anyone has to do is take a trip to the local strip mall & see how many stores are for rent or a drive to the mall and although you may see a lot of people there usually they are walking around with no bags so they are there to get out of the house or for some free air conditioning.  The economy is still struggling & will for quite some time & that my friends is the sad truth.
May 17, 2012 11:25AM
Wall Street/Fraud Street ! Here comes your Black Swan Event !
May 17, 2012 11:24AM
ddb, quite with your Acorn talking points.   48% currently  pay ZERO tax.  The 1% pays 40% of the tax.

Maybe we need to tax EVERYONE the same.  In case you didn't notice the tax rates have been the same for a decade now.  No one has cut anyone's taxes.   

"57  States" has gutted the Social Security tax however.  We need those NOT PAYING  a DIME to start to pull their weight.  But Democrats, seem to think they need to SPONGE off those already carrying them...

How about these leeches start pulling their own weight?   

I realize democrats with the public option education are as bright as "57 States"...  and completely clueless about business...   Maybe they should get off the dole and start their own business...  or do you think like the OWS movement that they are "entitled" to free handouts?

Once a bum, always a democrat...   
May 17, 2012 11:21AM
 At some point the dollar's strength is no longer tied to the Euro's weakness. If it remained that way, gold would drop to 0 if the Euro collapsed altogether because the dollar would be infinitely strong and your European vacation would be practically free
May 17, 2012 11:12AM
Remember when people who warned about a housing bubble were dismissed as doomsayers because it took years to unfold? Deja vu and ditto for the EU collapse. They have been yammering on it for 2 years now and everybody is thinking it won't happen, JUST like housing

May 17, 2012 11:12AM

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!

May 17, 2012 11:11AM

Everyone knows that we can never have a simplier and fairer tax code.  Those that

need to pass that type of legislation are certainly not going to kill THEIR goose

that lays the golden eggs.  The current tax code.

May 17, 2012 11:04AM

Sears (SHLD + 11.07%) 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.


Had they not had the $200 million dollar gain from selling off stores they would have lost money.  Once again, this chain is heading downhill fast and just like other corporations here in America they continue to sell off assets, cut jobs etc. just to make their quarterly numbers.  Key questions to ask Sears....are they increasing their comp stores sales?  Are their overall sales and margin increasing? Is there foot traffic increasing?  Is there average sales ticket price increasing?  This chain is heading no where but down and that's the TRUTH!!

May 17, 2012 10:54AM
This the third day for blaming Greece.  Greece is the 263 excuse this administration has used for their failure to perform.  I suggest that reality has set in is the reason for stock market performance.  My life savings are still safe (although being eroded daily by inflation) under my mattress. 
May 17, 2012 10:53AM
So many of you think someone owes you something.  Are you special?  Unique?

Daily rants about politics, government and the markets.  The unfairness of it all.  The coulda, woulda, shoulda.  But if only such and such would happen, then it will be ok?  Welcome to the human condition. Birth/life/death.

Do you really like looking as weak as many of you appear to be here.  Is that your only "song and dance" blame, justification, self victimization?

I think you can do better then that? 

If "change" is a joke for many of you.  Why are you so afraid of it?


May 17, 2012 10:52AM

BJM    Hope you find a good job.  If you do not want to work   VOTE for obame    He is truely clueless


maybe not   He and wifey dont like America    I forgot

May 17, 2012 10:51AM

Do Gooder BS  Issue Makers will be clamoring for "their" gun and complaining about the cost of Ammunition! 


Please keep in mind that if you are stock piling ammunition for your weapons but you are not stock piling food and water you will end up being a problem. Think ahead. .... JMHO

May 17, 2012 10:50AM

Mirage Guy,


said: Although with government consuming 26% of GDP, would not the tax rate have to be near this level?   And with the rate at near this level would not Americans resort to an underground economy?

The rate I have seen in the literature about the Fair tax is around 23%.  I thnk that if

the Fair Tax succeeds the government wound no longer need to consume 25% of

the GDP. 


What sealed the deal for me about the Fair Tax is what is called the pre-bate.  It refunds

each month to every family the tax on the poverty level income based on  number of people

in the family.  My biggest problem with the Fair Tax was how it would penalize the

lower income people.  This aleviated that problem.


Remember it also replaces the SS and MC tax.  So people get their whole paycheck

free of all federal taxes.  Have a feeling this would end up as the only tax and the states

would share in this revenue as well.


said: And with the rate at near this level would not Americans resort to an underground economy?


There is already and underground ecomony that is not taxed.  Gambling, prostitution, and

drugs.  But the money from these activities and others will at some point be spent and

subject to the fair tax.  I read that the current underground economy may be 10% or more

of the GDP.





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