In the U.S.: Stock Futures Drop On Concern Over Spanish Debt

25 May 2012

U.S. bank stocks fall, as Spain’s financial sector remains shaky to say the least.

U.S. stock futures fell, indicating the Standard & Poor’s 500 Index will trim its biggest weekly advance in more than two months, amid concern Spain’s regional governments are having trouble with finances.

Bank of America Corp. (BAC) and Citigroup Inc. (C) retreated at least 0.5 percent. Facebook Inc. (FB) declined 1 percent, following a two- day advance. Chesapeake Energy Corp. (CHK)rallied 1.5 percent to pace gains among commodity companies. Groupon (GRPN) Inc. added 0.5 percent as the largest daily coupon website is said to be testing a credit card-reader for merchants that could vie with similar devices offered by Square Inc. and EBay’s PayPal Inc.

S&P 500 futures expiring in June fell 0.2 percent to 1,320.60 at 8:44 a.m. New York. The benchmark measure has rallied 2 percent this week. Dow Jones Industrial Average futures lost 29 points, or 0.2 percent, to 12,507. The U.S. stock market will close on May 28 for a holiday.

Spain’s government is analyzing “with all caution” requests from regional governments to help them regain access tocapital markets, Deputy Prime Minister Soraya Saenz de Santamaria said. “These are complex mechanisms, which have to analyzed with all the difficulties and complexities,” she told reporters today after a cabinet meeting.

Investors also awaited the Thomson Reuters/University of Michigan final index of consumer sentiment for May. The gauge climbed to 77.8, the highest since January 2008, from 76.4 the prior month, according to the median forecast of economists surveyed by Bloomberg.

Concern about a slowdown in global growth and a worsening of Europe’s debt crisis drove the S&P 500 down 5.5 percent so far this month. Financial, energy and technology shares have tumbled at least 7.7 percent in May.

Banks Fall

Financial companies retreated. Bank of America lost 0.7 percent to $7.09. Citigroup declined 0.5 percent to $26.54.

Facebook retreated 1 percent to $32.70. The company’s initial public offering, which set a record for technology companies by raising more than $16 billion, also has the distinction of producing the worst return among the largest U.S. deals of the past decade.

Shares of Menlo Park, California-based Facebook have fallen 13 percent since underwriterssold them for $38 on May 17. The decline exceeds the 10 percent drop by MF Global Holdings Inc. in its first five days. Visa Inc. did best among the biggest deals, rising 45 percent.

Facebook and Morgan Stanley, its lead underwriter, have faced criticism for boosting the number of shares sold in the IPO by 25 percent last week to 421.2 million. They also boosted the asking price to between $34 and $38 from $28 to $35.


“Raising the price and number of shares was clearly a mistake,” said Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees more than $1.9 billion.

The first day of trading was disrupted by the “poor design” of Nasdaq OMX Group Inc.’s software for IPO auctions, Robert Greifeld, the chief executive officer of the exchange operator, said on May 20. The malfunction also prevented Nasdaq OMX from sending messages to brokerages confirming that clients’ orders went through.

Chesapeake rallied 1.5 percent to $15.81. Billionaire investor Carl Icahn, known for pushing for change at the companies in which he invests, has become one of Chesapeake’s largest shareholders, said a person with knowledge of the matter. Bloomberg News reported it before the close of regular trading yesterday.

Groupon gained 0.5 percent to $11.95. The company collects a fee of less than 3 percent on each transaction through the readers, a person with knowledge of the matter said. The device is part of efforts to lift revenue from the local shops and restaurants that use its online coupons. The company last year introduced Groupon Now, a service that lets users download coupons instantly to mobile phones.


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