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Stocks fall again on Europe woes

by JOSHUA FREED THE ASSOCIATED PRESS | May 19, 2012 at 3:21 a.m.

— The Dow Jones industrial average dropped 73.11 points Friday to close at 12,369.38.

Stocks have been in a slump over the past two weeks as traders saw an escalating risk that Greece could leave the euro, causing more disruptions in markets. The Dow fell 3.5 percent for the week. It has now declined on 12 of the past 13 trading days.

Nine of the 10 industry groups in the Standard & Poor’s 500 index fell. Financials dropped the most, 1.1 percent.

Trading of Facebook shares, the year’s most eagerly awaited initial public offering, was delayed about 30 minutes because of a glitch at Nasdaq. The stock market said the problem was with sending messages about whether trades had been executed. It was almost 2 1/2 hours before it said its trade messages were working normally.

The glitch sent shares of Nasdaq OMX Group Inc., parent company of the Nasdaq market, down 4.4 percent.

Facebook shares were priced at $38 and initially traded as high as $45. They closed at $38.23.

Europe was the bigger worry for investors. The Fitch ratings agency dropped Greece to the lowest possible grade for a country not in default Thursday.

Fitch said Greece’s departure from the euro “would be probable” if elections next month do not reverse political trends in Greece, which have brought in politicians opposed to the terms of Europe’s bailout.

Also, ratings agency Moody’s downgraded 16 Spanish banks late Thursday, three days after downgrading Italy’s, noting they are vulnerable tohuge losses on government debt.

Borrowing costs for Italy rose slightly to 5.76 percent Friday. The yield on Spain’s 10-year bond fell slightly to 6.2 percent, a level that’s still very high by historic standards.

European shares edged lower, after several days of big losses. Britain’s FTSE 100 fell 0.1 percent, Germany’s DAX lost 0.6 percent and France’s CAC-40 fell 0.1 percent.

The Standard & Poor’s 500 index fell 9.64 points to close at 1,295.22. The Nasdaq composite index fell 34.90 points, or 1.2 percent, to close at 2,778.79.

Declining stocks on the New York Stock Exchange outnumbered advancers by a ratio of more than 3-to-1 and consolidated volume was 4.4 billion shares.

Hewlett-Packard fell 2.7 percent - the biggest decline among the Dow’s 30 stocks- after it said it might eliminate up to 30,000 jobs because of dwindling demand for personal computers.

Gap fell 2.3 percent even though it issued higher guidance for the year.

There were bright spots. jumped 8.8 percent after the maker of Web-based business software reported better-than-expected earnings and raised its guidance for the year.

Yahoo shares rose 3.7 percent after Dow Jones’ tech website reported that the Web portal is close to a deal to sell a large part of its stake in China’s Alibaba Group. Many investors view the Alibaba stake as Yahoo’s most valuable asset.

Oil prices fell $1.08 to $91.48. Along with stocks, oil has dropped rapidly in recent days because slowing economies use less of it.

Business, Pages 34 on 05/19/2012

Print Headline: Stocks fall again on Europe woes


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