Europe’s Woes Slam the U.S.: Wednesday’s IP Market Recap

by Marc Bastow | May 30, 2012 6:04 pm

IPMarketRecap Europe's Woes Slam the U.S.: Wednesday's IP Market Recap[1]Stocks fell swiftly at the open Wednesday as worries about Europe’s debt crisis, specifically the Spanish banking system, rattled markets early in Asia and Europe, and spread to the U.S.

The European Central Bank issued a statement Wednesday saying it had not been consulted on the bailout for Bankia, Spain’s fourth-largest bank, and that a recapitalization could not be provided by the ECB and eurozone central banks. The statement raised questions about Spain’s ability to fund internal bank bailouts that could reach as much as €100 billion.

For the day, the Dow was down 161 points, or 1.28%, to 12,419. The S&P ended lower by 19, or 1.43%, to close at 1,313. A and the Nasdaq fell 34, or 1.17%, to 2,837.

Yields on U.S. 10-year Treasury bonds sank to their lowest level in history at 1.656% as investors fleeing equities  found solace in safer U.S. debt instruments.

Europe’s woes were felt in all parts of the Dow, as Alcoa (NYSE:AA[2]) fell 3.5%, Caterpillar (NYSE:CAT[3]) dropped 2.5%, oil stocks Chevron (NYSE:CVX[4]) and Exxon Mobil (NYSE:XOM[5]) both lost 2.6%, and Bank of America (NYSE:BAC[6]) shed 3.1%.

Pep Boys (NYSE:PBY[7]) agreed to terminate a proposed merger with Gores Group[8] to take the company private. PBY will get a $50 million breakup fee, but investors hammered the shares, with the stock selling down 20% to $8.89 on the news.

BlackBerry maker Research In Motion (NASDAQ:RIMM[9]) announced it will lay off 2,000 employees as it battles with a slower market and recent earnings warnings. The stock tumbled another 8% from yesterday’s down day to finish at $10.35. Facebook (NASDAQ:FB[10]) also continued its slide with another 2.25% loss on the day. FB has now lost 25% of its IPO price[11].

Sprint (NYSE:S[12]) fell 3.37% to finish at $2.38 after announcing a drop-dead date[13] for closing down its iDen Nextel Network. The axe will fall next June, after which Sprint will no longer market or sell the product.

Monsanto (NYSE:MON[14]) broke the mold with strong earnings and an upbeat forecast, lifting the agricultural products company up 2.2% to $76.41.

Three Up

Three Down

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he is long XOM.

Endnotes:
  1. [Image]: http://investorplace.com/hot-topics/investorplace-market-recap/
  2. AA: http://studio-5.financialcontent.com/investplace/quote?Symbol=AA
  3. CAT: http://studio-5.financialcontent.com/investplace/quote?Symbol=CAT
  4. CVX: http://studio-5.financialcontent.com/investplace/quote?Symbol=CVX
  5. XOM: http://studio-5.financialcontent.com/investplace/quote?Symbol=XOM
  6. BAC: http://studio-5.financialcontent.com/investplace/quote?Symbol=BAC
  7. PBY: http://studio-5.financialcontent.com/investplace/quote?Symbol=PBY
  8. terminate a proposed merger with Gores Group: http://investorplace.com/2012/05/pep-boys-merger-canceled-shares-plunge/
  9. RIMM: http://studio-5.financialcontent.com/investplace/quote?Symbol=RIMM
  10. FB: http://studio-5.financialcontent.com/investplace/quote?Symbol=FB
  11. FB has now lost 25% of its IPO price: http://investorplace.com/ipo-playbook/facebooks-valuation-reset-might-not-be-over/
  12. S: http://studio-5.financialcontent.com/investplace/quote?Symbol=S
  13. announcing a drop-dead date: http://investorplace.com/2012/05/sprint-gives-date-for-nextel-shutdown/
  14. MON: http://studio-5.financialcontent.com/investplace/quote?Symbol=MON
  15. ARNA: http://studio-5.financialcontent.com/investplace/quote?Symbol=ARNA
  16. TEVA: http://studio-5.financialcontent.com/investplace/quote?Symbol=TEVA
  17. PAY: http://studio-5.financialcontent.com/investplace/quote?Symbol=PAY
  18. CNQ: http://studio-5.financialcontent.com/investplace/quote?Symbol=CNQ
  19. NOK: http://studio-5.financialcontent.com/investplace/quote?Symbol=NOK
  20. JOSB: http://studio-5.financialcontent.com/investplace/quote?Symbol=JOSB

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