US Stocks Lean Lower As Facebook Optimism Fades
Source: Tomi Kilgore
--Stocks lean lower, with Dow on track for worst week of the year
--Facebook opens up 11%, then falls to IPO price of $38 before bouncing
--Europe worries increase as Moody's downgrades Spanish banks, Fitch cuts Greece
By Tomi Kilgore
DOW JONES NEWSWIRES
Stocks leaned to the downside, putting the market on track to suffer the worst week of the year, as optimism surrounding Facebook faded after the shares debuted for trading.
The Dow Jones Industrial Average lost 14 points, or 0.1%, to 12429, in afternoon trading on Friday. The Dow was on track to suffer its 12th loss in 13 sessions, which would be the worst 13-session performance since October 1974. In addition, it was on track to suffer the worst weekly point and percentage losses since the week ending Nov. 25, 2011.
The Standard & Poor's 500-stock index fell one point, or 0.1%, to 1304. The Nasdaq Composite shed 10 points, or 0.4%, to 2804.
Health care and consumer staples paced the sector decliners, while materials led the advancers.
"This looks to be disappointment in the price action in Facebook after the IPO," said Todd Salamone, director of research at Schaeffer's Investment Research. While it seemed a little simplistic to think investor actions were being dictated by one stock, Salamone noted the Dow's price action suggested otherwise.
The Dow first edged higher as Facebook opened at $42.05, or 11% above its $38 initial public offering price, then fell to its lows of the day when Facebook traded down to its intraday low of $38. With Facebook recovering to be up 8.4% at $41.18 recently, the Dow pared its losses.
"It is what it is," Salamone said.
Once the hype around Facebook fades, analyst expect investor will turn their attention back to concerns about Europe, and contagion risk from Greece.
"Facebook is a nice, one-day diversion," said Paul Nolte, managing director at Dearborn Partners. With the passing of Facebook's debut, Nolte thinks investors will get back to being "euro-centric."
The Stoxx Europe 600 dropped 1.1% to a five-month low after Moody's Investors Service downgraded a number of Spanish banks and Fitch Ratings cut Greece's credit rating further into junk status.
"It feels as though we're further away from a resolution today than we were two months ago," Nolte said.
Asian markets closed lower on the back of U.S. losses and the early selloff in Europe. Japan's Nikkei Stock Average slid 3%, and China's Shanghai Composite shed 1.4%.
There are no major economic releases due out on Friday.
In other corporate news, Kraft Foods advanced 0.8% after the blue-chip food company said the Internal Revenue Service provided a favorable tax ruling, confirming the tax-free status of its planned North American grocery spinoff.
Autodesk slumped 13% after the design-software maker reported fiscal first-quarter earnings that matched estimates but provided a somewhat downbeat second-quarter outlook.
Foot Locker jumped 10 after the athletic-footwear seller reported fiscal first-quarter earnings that were well above expectations, backed by increasing margins and same-stores sales.
Salesforce.com climbed 10% after the business-software maker reported fiscal first-quarter earnings and revenue that beat expectations and provided an upbeat outlook for the year.
-By Tomi Kilgore; 212-416-2470;
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