US stocks extend loss amid EU banking fears

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IANS | 18 May, 2012
Wall Street extended losses Thursday, with the Dow Jones industrial average suffering its 11th loss in last 12 trading sessions, amid intensified fears about European banking systems.

When the market closed, the Dow Jones industrial average fell 156.06 points, or 1.24 percent, to 12,442.49. The Standard & Poor's 500 was down 19.44 points, or 1.51 percent, to 1,304.86. The Nasdaq Composite Index lost 60.35 points, or 2.10 percent, to 2,813.69, Xinhua reported.

Thursday's gloomy economic data could hardly have any positive effect on the market. According to the US Labor Department, the number of people applying for jobless benefits was unchanged at 370,000 last week, in line with previous expectations.

A separate report from the Conference Board also showed the Leading Economic Index, which gauges the economic outlook for the next three to six months, dropped 0.1 percent to 95.5 in April, after six months of increases.

Adding to the selling, the Federal Reserve Bank of Philadelphia said manufacturing slowed in the mid-Atlantic region for the first time in eight months, with new orders decreasing and firms cutting jobs.

Two pieces of bad news about Europe came in the afternoon. Fitch ratings agency downgraded Greece's rating by one notch from B- to CCC, the lowest possible grade for a country that is not in default, warning of a probable Greek exit from the euro zone.

Shortly after that, Moody's Investors Service downgraded the long-term debt and deposit ratings for 16 Spanish banks and Santander UK PLC, which is a Britain-domiciled subsidiary of Banco Santander, as the banks' credit situation worsened and the government's ability to support the banks reduced.

Also worthy of mentioning on Wall Street was that Facebook set the price for its highly-anticipated initial public offering (IPO) at $38 per share after the market closed, which was the high end of its expected range of $34 to $38 per share.

At $38 a share, the social networking giant will sell 421 million shares, raising about $16 billion, which is the largest ever among all internet companies. That will also give the eight-year-old startup a valuation of $104 billion, the biggest of all time.