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Europe worries keep stocks down

Published: May 19, 2012 | 6:42 am
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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.

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.

Europe was the big worry for investors. The Fitch ratings agency dropped Greece to the lowest possible grade for a country not in default Thursday. 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.”

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.

In other news:

MEDIA GENERAL: Billionaire Warren Buffett’s company is making another foray into newspapers, agreeing to buy 63 newspapers from Media General Inc. for $142 million. “In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” Buffett said in a statement Thursday.

HEWLETT-PACKARD: It 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: It fell 2.3 percent even though it issued higher guidance for the year.

SALESFORCE.COM: It 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: It 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: It 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.

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