Stock Market News for May 21, 2012 - Market News
May 21 2012 - 5:06AM
Zacks
The hoopla about Facebook’s initial
public offering fizzled out on Friday as investors remained worried
abut the European economic situation, leading to another negative
finish for the benchmarks. Ratings agency Fitch had worrying news
for Greece and 16 Spanish banks were downgraded by Moody’s in a
separate development. Amidst lingering European concerns, which
threaten even global markets, US benchmarks could not escape
another round of weekly losses.
The Dow Jones Industrial Average
(DJI) slumped 0.6% and was down to 12,369.38. The Standard &
Poor 500 (S&P 500) plunged 0.7% and finished Friday’s trading
session at 1,295.22. The tech-laden Nasdaq Composite Index crashed
1.2% and ended at 2,778.79. The fear-gauge CBOE Volatility Index
(VIX) continued its uptrend even on Friday and jumped 2.5% to
settle at 25.10. Consolidated volumes on the New York Stock
Exchange, Nasdaq and American Stock Exchange were roughly 8.8
billion shares, sharply higher than the daily average of 6.83
billion. Declining stocks yet again outpaced the advancers on the
NYSE; as for 73% of stocks that declined, only 24% stocks could
manage to climb higher.
One of the most-anticipated IPOs
this year- Facebook, Inc. (NASDAQ:FB) was also the most actively
traded stock on the Nasdaq on Friday. Facebook’s volumes amounted
to 580,587,742 shares and witnessed a volatile run. The stock,
which was priced at $38.00, soared 10% in the morning, hitting a
high of $45.00 a share, but the gains fizzled out and it ended a
mere 0.6% higher from its issue price at $38.23.
Initially, investors had no clue
about their orders for Facebook as Nasdaq suffered a technical
glitch. Trading was delayed by half an hour on the Nasdaq as it
suffered some issues with sending trading messages. While Nasdaq
could fix the problem only at 1:50 p.m., shares of Nasdaq market’s
parent company Nasdaq OMX Group Inc. (NASDAQ:NDAQ) took a hit and
closed at 4.4% lower on Friday.
While excitement over Facebook
waned, benchmarks were once again affected by European financial
woes. With Greece looking likely to exit the euro, ratings agency
Fitch downgraded Greece’s long-term rating by a notch to ‘CCC’ from
‘B-’. Things in Greece have not been smooth owing to its political
turmoil, which majorly impacted the ratings agency’s decision.
Fitch stated: "The downgrade of Greece's sovereign ratings reflects
the heightened risk that Greece may not be able to sustain its
membership of Economic and Monetary Union".
Greece went to the polls earlier
this month on the 6th and with no clear majority for any
political party, the country has failed to form a government.
Greece needs to secure its next tranche of bailout, failing which
it will default and will also exit the euro. Amidst such a
scenario, the President has called for another election next month.
However, if an anti-austerity party comes to power, international
lenders might choose to withhold the bailout package. As of now,
with every passing day the possibility of Greece exiting the euro
is getting higher. "A Greek exit would likely result in widespread
default on private sector as well as sovereign euro-denominated
obligations, despite a moderate sovereign debt service burden
following the restructuring of Greek government bonds in March,"
Fitch added.
In another development, Moody's
Investor Service downgraded 16 Spanish banks, reflecting the
financial troubles of the nation as well as the entire region.
Moody”s said: “Amidst the ongoing euro area debt crisis, the
Spanish government's rising budget deficit and the renewed
recession, sovereign creditworthiness has declined…This decline is
a driver of today's bank rating actions".
These concerns dampened sentiment
in U.S. markets and financials were big losers once again. The
Financial Select Sector SPDR (XLF) dropped 1.1% and financial
stocks including Citigroup Inc. (NYSE:C), JPMorgan Chase & Co.
(NYSE:JPM), Goldman Sachs Group, Inc. (NYSE:GS), Barclays PLC (ADR)
(NYSE:BCS), Regions Financial Corporation (NYSE:RF) and Wells Fargo
& Company (NYSE:WFC) dropped 1.5%, 1.3%, 1.6%, 1.9%, 1.0% and
1.6%, respectively.
With Friday’s fall, markets ended
another week on the losing note. The Dow, S&P 500 and Nasdaq
lost 3.5%, 4.3% and 5.3%, respectively. The fear-gauge index too
stood testimony to increasing apprehensions and concerns in the
markets. The VIX jumped by nearly 10% twice last week and was also
trading at its highest level since late December last year. As for
the 5-day change, last week, VIX soared 26.2%.
BARCLAY PLC-ADR (BCS): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
FACEBOOK INC-A (FB): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
NASDAQ OMX GRP (NDAQ): Free Stock Analysis Report
REGIONS FINL CP (RF): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis Report
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