US stocks: Wall Street falls before G8 leaders meet on euro zone
NEW YORK, May 19 — US stocks fell yesterday as investors turned cautious before leaders of the Group of Eight nations met about the euro zone debt crisis and after a shaky market debut by Facebook Inc.
The S&P 500 dipped below the 1,300 level, seen as a key support point, for the first time since mid-January, before the meeting by the leaders of the world’s major industrial economies near Washington.
Leaders will try to confront the continuing crisis in the euro zone, including the increasing likelihood of a Greek departure from the bloc.
Growing concerns that global growth will suffer from the euro zone’s problems and signs of a slowing US recovery have put the S&P 500 on track for a sixth straight day of declines and its worst week since November. The broad market index has dropped 7.3 per cent so far in May.
Shares of the social networking giant Facebook were volatile in early trading. After early gains of more than 10 per cent, they fell back to the US$38 (RM118.94) issue price. Late in the session Facebook was up modestly at US$38.50 and was the Nasdaq’s most actively traded stock, with more than 410 million shares.
After a delay in the opening print that drove up anxiety levels among traders and onlookers outside the Nasdaq, the company’s closely watched stock began trading at US$42.05, compared with an IPO price of US$38. It rose as high as US$45 before pulling back.
The Nasdaq said it was investigating an issue in delivering trade execution messages from the IPO cross in Facebook.
“When Nasdaq started running into some problems early on before Facebook opened - when there was a sense they kept putting it off, putting it off, the market did come under a little bit of pressure because people were getting nervous about it,” said Ken Polcari, Managing Director at ICAP Equities in New York.
“When the market faded, we are coming now into Friday afternoon, the G8 meeting and there is just some nervousness.”
Shares of companies in the online social media sphere were trading lower. LinkedIn fell 4.5 per cent to US$100.19 and Groupon Inc fell 5.7 per cent to US$11.70. Zynga plunged 12.2 per cent to US$7.26.
The Dow Jones industrial average dropped 75.68 points, or 0.61 per cent, to 12,366.81. The Standard & Poor’s 500 Index dropped 9.22 points, or 0.71 per cent, to 1,295.64. The Nasdaq Composite Index dropped 29.24 points, or 1.04 per cent, to 2,784.45.
Biotechs stumbled, weighed down by an 8.6 per cent drop in Sequenom Inc to US$4.36 after the company said insurer Coventry Health Care Inc terminated an agreement to provide coverage for its prenatal test to detect certain chromosomal abnormalities including Down Syndrome. The NYSEArca biotech index dropped 2 per cent.
Shares of Foot Locker jumped 9.1 per cent to US$30.56 after the athletic footwear retailer posted higher-than-expected quarterly results.
Winnebago Industries Inc surged 6.8 per cent to US$9.09 after receiving an unsolicited buyout offer from North Street Capital LP, the investment firm of racing car enthusiast Alex Mascioli, valuing the No. 1 US motorhome maker at US$321.5 million. — Reuters