Stocks get a housing lift; Facebook slumps

Updated: 6:24 p.m. ET

Stocks rallied solidly today on hopes for housing, but Facebook (FB) was battered.

Shares of the social-networking site dropped $3.07 to $28.84. They're now a whopping 26% below $38, the price at which the shares went public on May 17. The stock fell on talk Facebook was in discussions to buy Oslo-based Opera Software (OPESY), developer of a browser for smart phones. Analysts said competition from Google (GOOG) and others could push the price tag of any deal above $1 billion.

In addition, there was new talk Facebook may be working to market a new smart phone.

Facebook's woes come as investors were cheered by a report showing more stability in the housing market. But worries about U.S. consumer confidence and a downgrade of Spanish debt combined to trim gains.

The Dow Jones industrials ($INDU) closed up 126 points to 12,581. The close was a nice rebound from 12,515, the level at 1:25 p.m. ET. The blue chips had been up as many as 157 points around 10:45 a.m. The Standard & Poor's 500 Index ($INX) was up 15 points to 1,332, and the Nasdaq Composite Index ($COMPX) had gained 33 points to 2,871.

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The Nasdaq-100 Index ($NDX), heavily influenced by Apple, gained 32 points to 2,559. Apple (AAPL), up $9.98 to $572.27, contributed more than eight points of the gain. Reports suggested a new Apple television might come out in time for Christmas.

While Facebook slumped, tech stocks overall were stronger, led by Apple, Microsoft (MSFT), Intel (INTC) and Qualcomm (QCOM). (Microsoft is the publisher of MSN Money.)

Ahead on Wednesday

Wednesday's market features reports on mortgage applications from the Mortgage Bankers Association of America and pending home sales from the National Association of Realtors. 

Thursday will bring reports on private-sector jobs from ADP, mass layoffs from Challenger Gray & Christmas and a major revision of gross domestic product.

On Friday, the Labor Department will report on payroll employment and unemployment. Also due are reports on May auto sales and the Institute for Supply Management's May manufacturing index.

Futures trading suggests a modestly lower open for U.S. stocks on Wednesday.

For the record, the Dow is down 4.9% for the month, with the S&P 500 off 5.1% and the Nasdaq down 6.5%. For the year, the blue chips are still up 3%, with the S&P 500 up 6% and the Nasdaq up 10.2%.

Research In Motion shares sag; company to explore options
After the close, Research In Motion (RIMM) announced it expects an operating loss for the fiscal first quarter. Analysts were projecting earnings of 43 cents a share, down from $1.33 a share a year ago.

The company also hired J.P. Morgan Securities and RBC Capital Markets to help the company in a strategic review.

The company did not say it has put itself up for sale, although many analysts believe it probably is looking for a buyer. Nor did it say it was considering asset sales.

Shares fell more than 11% to $9.93 after the statement was released. But the shares were $10.35 at 5:30 p.m. They had closed at $11.23, up 23 cents.

Multinational stocks boost market
Stocks of companies with heavy reliance on non-U.S. revenue also boosted the market, including IBM (IBM), Caterpillar (CAT), United Technologies (UTX) and 3M (MMM).

Crude oil (-CL) in New York and gold (-GC) were initially higher but fell back as the euro declined against the U.S. dollar.

The euro fell after Egan-Jones, a smallish rating agency, downgraded Spanish debt as confusion mounted about how the country planned to finance a bailout of its third-largest bank. The downgrade came after stock markets in Europe closed generally higher. Spain was the exception.

Polls suggested that Greece's New Democratic Party, which supports the country's remaining in the eurozone, would win the country's June 17 election.

Twenty-five of the 30 Dow stocks were higher, led by Caterpillar, Alcoa (AA) and United Technologies.

Energy was the top-performing S&P 500 sector. Tops in the index was Peabody Energy (BTU), the coal producer, after an upgrade, followed by financial services company Genworth Financial (GNW), defense contractor SAIC (SAI) and Chipotle Mexican Grill (CMG).

Chesapeake Energy (CHK), the large and troubled natural-gas and oil producer, was up 54 cents to $16.35. Activist investor Carl Icahn announced a 7% stake in the company last week.

 

A total of 451 stocks in the S&P index were higher today.
 
Meanwhile, 68 stocks in the Nasdaq-100 were higher, led by Chinese Internet travel site Ctrip.com International (CTRP) and Avago Technologies (AVGO) and NetApp (NTAP),

Energy prices -- New York close
			Tues.			Fri.			Month chg.			YTD chg.
Crude oil (-CL)			$90.76			$90.86			-13.45%			-8.17%
(per barrel)
Heating oil (-HO)			$2.8132			$2.8329			-11.65%			-3.47%
(per gallon)
Natural gas (-NG)			$2.485			$2.627			8.75%			-16.86%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.8335			$2.8317			-9.32%			6.63%
(per gallon)
Brent crude			$106.68			$107.55			-10.76%			-0.65%
(per barrel)
Retail gasoline			$3.6360			$3.6410			-4.72%			10.99%
(per gallon; AAA)

Crude oil and gold move up
Crude oil in New York settled down 10 cents to $91.76 a barrel. Brent crude was off 18 cents to $106.65 a barrel.

The national average price of gasoline was $3.636 a gallon, according to AAA's Daily Fuel Gauge Report. That's down from $3.666 on Friday and down 7.6% from its peak of $3.936 a gallon in early April.

The gain in oil prices was the catalyst for rising prices for energy stocks.

Gold settled down $20.20 to $1,548.70 an ounce.

Interest rates were lower, with the 10-year Treasury yield falling to 1.731% from 1.745% on Monday.

Signs of stability emerge in home prices
The Standard & Poor's Case/Shiller Home Price Index of 20 cities for March fell 2.6% from a year ago, as expected by economists surveyed by Reuters, after a 3.5% decline in February. But month-over-month, home prices rose in most major U.S. cities for the first time in seven months, up a modest 0.09%.

Some markets, including Charlotte, Denver, Dallas and even Phoenix, saw prices gain on a year-over-year basis. 

Prices hit new lows in Atlanta, Chicago, Las Vegas, New York and Portland, Ore.

There have been modest signs of improvement in recent reports on existing-home sales and housing starts.

Homebuilding stocks were generally higher. The Philadelphia Housing Sector Index ($HGX) was up 3.14 points to 129.04.

A drop in consumer confidence?
The Conference Board said its read on consumer confidence for May fell to 64.9, the lowest of the year, from a downwardly revised 68.7 in April. Economists expected a reading of 70. Americans have become less hopeful about labor market and business conditions.

The report seems at odds with a University of Michigan report last week suggesting confidence is building.

Ian Shepherdson of High-Frequency Economics said much of the decline was prompted by lower stock prices. But gasoline prices are lower, which should improve consumer moods.

But IHS Global Insight's Chris Christopher was gloomier. "Consumer confidence is having a very tough time getting out of recession territory," he wrote this morning. "Consumers face too many head winds such as high debt burdens, depressed home prices, a lack of confidence in the government's ability to make things better, volatile equity markets, and rising student loan balances."

Short hits from the markets -- New York close
			Tues.			Fri.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0800%			0.080%			-11.11%			700.00%
5-year Treasury note			0.764%			0.762%			-5.80%			-7.95%
10-year Treasury note			1.731%			1.745%			-9.61%			-7.48%
30-year Treasury bond			2.842%			2.846%			-8.59%			-1.63%
Currencies
U.S. Dollar Index			82.581			82.52			4.73%			2.56%
British pound			1.5640			1.5691			-3.71%			0.66%
(in U.S. $)
U.S. $ in pounds			£0.639			£0.637			3.85%			-0.65%
Euro in dollars			$1.25			$1.25			-5.70%			-3.59%
(in U.S. $)
U.S. $ in euros			€ 0.801			€ 0.797			6.04%			3.72%
U.S. $ in yen			79.68			79.48			-0.40%			3.35%
U.S. $ in Chinese			6.36			6.34			0.92%			0.52%
yuan
Canada dollar			$0.977			$0.977			-3.58%			-0.41%
(in U.S. $)
U.S. dollar			$1.024			$1.023			3.72%			0.41%
(in Canadian $)
Commodities
Gold (-GC)			$1,548.70			$1,568.90			-6.94%			-1.16%
(per troy ounce)
Copper (-HG)			$3.462			$3.448			-9.60%			0.76%
(per pound)
Silver (-SI)			$27.7910			$28.368			-10.40%			-0.44%
(per troy ounce)
Wheat (-ZW)			$6.5675			$6.8000			0.34%			0.61%
(per bushel)
Corn (-ZC)			$5.6250			$5.785			-11.31%			-12.99%
(per bushel)
Cotton			$0.7271			0.7272			-18.67%			-20.69%
(per pound)
Coffee			$1.6790			1.7025			-6.49%			-26.89%
(per pound)
Crude oil (-CL)			$90.76			$90.86			-13.45%			-8.17%
(per barrel)