US stocks: Wall Street to rise after steep decline as Facebook debuts
NEW YORK, May 18 − US stocks were set to open higher today but major indexes were still setting up to close their worst week of the year, while Facebook’s market debut could help lift battered investor sentiment.
The S&P has fallen 6.7 per cent so far in May, and while volatility is expected to continue, some analysts were forecasting a near-term rebound as valuations become more attractive.
Investors are bracing for Facebook’s debut after the world’s No. 1 online social network raised about US$16 billion (RM50.08 billion) in one of the biggest initial public offerings in US history. Facebook priced its offering at US$38 a share yesterday, and shares are expected to begin trading under the FB symbol on Nasdaq at around 11am (1500 GMT).
The large weekly decline in equities has come amid uncertainty over a political crisis in Greece and whether that could trigger a default and possible exit from the euro zone.
Market participants were skittish even as a poll showed Greek voters are returning to the establishment parties that negotiated its bailout.
“Even good news is not enough to overcome the fear that there is going to be a dramatic slowdown in the world economy because of the European crisis,” said Rick Meckler, president of investment firm LibertyView Capital Management in New York.
“Today, Facebook trading up would be a good start,” he said, adding that a decline below the IPO price “could be a big negative for the market.”
Shares of companies in the online social media sphere were active before the bell. LinkedIn rose 2.4 per cent to US$107.45 and Groupon added 2.6 per cent to US$12.73.
S&P 500 futures rose 6 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 53 points, and Nasdaq 100 futures added 9 points.
The cost to insure Spanish government debt against default hit record highs Friday, a day after Moody’s cut its ratings on 16 Spanish banks, heightening fears of contagion from the Greek political crisis.
Spanish government-run Bankia shares, up more than 25 per cent on the day but still down 31 per cent this month, led a rebound in Spanish banking stocks as traders closed short positions. US-traded shares of Banco Santander and BBVA rose near 5 per cent in light premarket trading.
Shares of Foot Locker jumped 8 per cent in premarket trading after the athletic footwear retailer posted higher-than-expected quarterly results.
US stocks hit a four-month low yesterday as another round of weak data undermined hopes for a US economic recovery, and as rising Spanish bond yields increased investor anxiety over the European nation’s banks. – Reuters