Dow 12,443 (-1.24%) S&P 1,305 (-1.51%)
Even though you’ll have to wait for Friday to buy shares of Facebook (FB), the company’s record $105 billion valuation was already receiving media attention this afternoon worthy of a viral wardrobe malfunction video. MarketSnacks of course will have you covered tomorrow on the stock’s first day performance – but today, it wasn’t aggressive Facebook anticipation that sent markets to their 5th straight loss. This morning, blue chip American retailers Sears (SHLD) and Wal-Mart (WMT) jumped over 3% and 4%, respectively, after 1st quarter earnings smashed analyst expectations and projected a solid 2nd quarter. But disappointing US economic reports and developments in Spain took control later on and slammed the Dow down 156 points for its 11th loss in 12 days.
Spanish bond yields spike and Moody’s downgrades Spanish banks
Apparently all those bulls killed in Spanish bullfights are bad karma. While Greece dominated headlines all week for its failed new government, developments in Spain highlighted debt crisis fears among the other PIIGS, pulling markets down. First, the yields on Spanish bonds (which is the return required by investors funding the nation’s debt) increased because investors feel that they are taking on greater risk from the financially struggling country and, therefore, deserve more in return. Then, after US markets closed, ratings agency Moody’s reportedly downgraded 16 key Spanish banks multiple notches, many from B-level to C-level grades. Though many investors expected this, the downgrades reflect how financially unstable the banking institutions have become, increasingly more likely to default on debts.
Initial Jobless Claims flat compared to last week, Mid-Atlantic manufacturing slows
Once again, initial jobless claims were unchanged at 370,000 this week, signaling little improvement in the labor market. Although it was below the symbolic 400,000 threshold, economists would like to see the number of newly unemployed gradually decrease week to week, and this figure has gradually risen since touching 350,000 several weeks ago. In other Econ data the Federal Reserve Bank of Philadelphia reported slowing industrial activity in the mid-Atlantic region. Following reports of industrial growth from the New York Fed earlier this week, it’s difficult to interpret this news, but a steady trend of slightly disappointing econ data is washing away the remaining US economic optimism from the monster start of 2012 we all witnessed.
- All hail the Facebook! The social network sold $18.4 billion of shares to VIP investors for $38/share today. At tomorrow’s initial public offering (IPO) common investors will pounce at their first chance to buy shares of the $105 billion company on the public markets. 9:30 AM tomorrow: NASDAQ stock exchange + “FB” = MARKET MAYHEM.
- JP Morgan (JPM) CEO Jamie Dimon responds to the newest development in last week’s $2 billion trading loss – he agreed to testify before the US Senate on the incident and whether new regulations are needed.
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