Facebook debut can't save sinking Dow
It's going to take more than Facebook's initial public offering to push the stock market higher.
Facebook shares rose 23 cents above their $38 offering price. It seemed like everything else fell.
The Dow Jones industrial average has been in a slump over the past two weeks as traders saw an escalating risk that Greece could leave the euro, causing more disruptions in markets. Remember the go-go days of May 1, 2012? The Dow was up 8.7 percent for the year. After Friday, it's up just 1.2 percent.
On Friday the Dow Jones industrial average dropped 73.11 points, to close at 12,369.38. It fell 3.5 percent for the week. The Dow has now declined on 12 of the last 13 trading days.
Nine of the 10 industry groups in the Standard & Poor's 500 index fell. Financials dropped the most, 1.1 percent.
Trading for the year's most eagerly awaited initial public offering was delayed about 30 minutes because of a glitch at Nasdaq. Nasdaq said the problem was with sending messages about whether trades had been executed. It was almost two-and-a-half hours before it said its trade messages were working normally.
The glitch sent shares of Nasdaq OMX Group Inc., parent company of the Nasdaq market, down 4.4 percent.
Facebook shares were priced at $38 and initially traded as high as $45. They closed at $38.23.
Europe was the bigger worry for investors. The Fitch ratings agency dropped Greece to the lowest possible grade for a country not in default Thursday. Fitch said Greece's departure from the euro "would be probable" if elections next month do not reverse political trends in Greece, which have brought in politicians opposed to the terms of Europe's bailout.
Also, ratings agency Moody's downgraded 16 Spanish banks late Thursday, three days after downgrading Italy's, noting they are vulnerable to huge losses on government debt.
Representatives of the G-8 are meeting this weekend at Camp David, looking for assurances that leaders in Europe can contain damage if Greece leaves the euro.
"Despite all the attention on the Facebook IPO, I think there's still lots of underlying uncertainty surrounding this European debt situation," said Scott Wren, senior equity strategist for Wells Fargo Advisors in St. Louis. "This Greek situation isn't good. I think it's going to get worse before it gets better. Probably the same with Spain."
Borrowing costs for Italy rose slightly to 5.76 percent on Friday. The yield on Spain's 10-year bond fell slightly to 6.2 percent, a level that's still very high by historic standards.
European shares edged lower, following several days of big losses. Britain's FTSE 100 fell 0.1 percent, Germany's DAX lost 0.6 percent and France's CAC-40 fell 0.1 percent.
"The serious investors remain very concerned about the developments in Europe," said Jim Russell, regional investment director for US Bank Wealth Management in Cincinnati. "We think Facebook is a little bit of a sideshow. Great company. But maybe one that's valued on the high side of most people's tastes."
The Standard & Poor's 500 index fell 9.64 points to close at 1,295.22. The Nasdaq composite index fell 34.90 points, or 1.2 percent, to close at 2,778.79.
Hewlett-Packard fell 2.7 percent the biggest decline among the Dow's 30 stocks after it said it might eliminate up to 30,000 jobs because of dwindling demand for personal computers.
Gap fell 2.3 percent even though it issued higher guidance for the year.
There were bright spots. Salesforce.com jumped 8.8 percent after the maker of web-based business software reported better-than-expected earnings and raised its guidance for the year. Foot Locker rose 8.3 percent after its quarterly profit jumped 36 percent, sprinting past Wall Street predictions and setting a company record for quarterly earnings.
Yahoo rose 3.7 percent after Dow Jones' tech website AllThingsD.com reported that the web portal is close to a deal to sell a large part of its stake in China's Alibaba Group. Many investors view the Alibaba stake as Yahoo's most valuable asset.
Oil prices fell $1.08 to $91.48. Along with stocks, oil has dropped rapidly in recent days because slowing economies use less of it.
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