Wall Street posts worst week since June with Fed in mind

NEW YORK - Stocks fell on Friday and posted their biggest weekly decline since June as investors focused on when the Federal Reserve would begin to scale back its stimulus.

All but one of the 10 S&P 500 sector indexes ended lower.

The stock of J.C. Penney Co. skidded 5.8 percent to $12.87 and ranked as the S&P 500's biggest percentage decliner. Bill Ackman, the company's top investor, urged the retailer's board on Friday to replace its chairman.

Richard Fisher, president of the Federal Reserve Bank of Dallas, reiterated late Thursday that the central bank will probably begin cutting back on its massive bond-buying stimulus next month, as long as economic data continues to improve.

The lack of clarity over the Fed's plans gave investors reason to pull a record $3.27 billion out of U.S.-based funds that hold Treasuries in the latest week ended August 7, data from Thomson Reuters' Lipper service showed on Thursday.

"People are looking ahead to the September FOMC meeting and the prospect that the Fed begins its long-awaited exit strategy," said Michael Sheldon, chief market strategist at RDM Financial, in Westport, Connecticut.

The Dow Jones industrial average dropped 72.81 points, or 0.47 percent, to end at 15,425.51. The Standard & Poor's 500 Index declined 6.06 points, or 0.36 percent, to 1,691.42. The Nasdaq Composite Index fell 9.02 points, or 0.25 percent, to close at 3,660.11.

For the week, stocks posted their biggest declines since mid-June. The Dow fell 1.5 percent, snapping a six-week string of gains. The S&P 500 dropped 1.1 percent for the week and the Nasdaq slid 0.8 percent.

A week ago, both the Dow and the S&P 500 ended at record closing highs.

Stocks extended losses late in the session. President Barack Obama said he will make a decision on the nomination for the Federal Reserve chairman in the fall. Fed Chairman Bernanke is expected to step down when his second four-year term ends on January 31.

Bernanke rattled markets in late May by saying the Fed would begin to ease back on its stimulus program once the economy shows some improvement.

While many investors are concerned that economic growth will stall without the Fed's help, stock prices have been supported by some strong earnings and encouraging data overseas.

The S&P 500 is up 18.6 percent for the year so far.

In China, industrial output rose more than expected, adding to a string of data that indicated the economy may be stabilizing after an extended period of tepid growth.

U.S. economic data showed wholesale inventories unexpectedly fell 0.2 percent in June, marking a second straight month of declines, versus expectations calling for a gain of 0.4 percent.

U.S.-listed shares of BlackBerry Ltd jumped 5.7 percent to $9.76 after Reuters reported that the Canadian smartphone maker was warming to the idea of going private, citing sources familiar with the situation.

Priceline.com Inc, rose 3.9 percent to $969.89 a day after the online travel company reported earnings that beat expectations and gave a strong outlook. Some analysts speculate the stock's price will cross $1,000 soon, which would be a first for a Standard & Poor's 500 stock.

Earnings season is winding down, with 446 companies in the S&P 500 having already reported. Of those, 68 percent have exceeded analysts' expectations, slightly above the 67 percent beat rate over the past four quarters, Thomson Reuters data showed.

Volume was roughly 5.3 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, below the average daily closing volume of about 6.36 billion this year.

Decliners slightly outnumbered advancers on the NYSE by a ratio of about 15 to 14. On the Nasdaq, about three stocks fell for every two that rose.

source: interaksyon.com

Nasdaq hikes payout figure for botched Facebook IPO

SAN FRANCISCO — Nasdaq has raised to $62 million the amount of money it will set aside to cover trading losses due to computer glitches that disrupted the launch of Facebook shares onto the market.

The huge electronic market’s foul-up marred the $16 billion Facebook share issue on May 18, the most hotly awaited initial public offering on the U.S. markets in years.

“We deeply regret the problems encountered during the initial public offering of Facebook,” Nasdaq OMX Group chief executive Robert Greifeld said in a statement.

“We have learned from this experience and we will continue to improve our trading platforms.”

Nasdaq in June proposed setting aside $40 million to cover brokers’ losses caused by the botched IPO but the compensation plan immediately ran into criticism as being inadequate.

“After careful analysis, the program has broadened the eligibility by adding a new class of orders to be accommodated in addition to the three classes that were announced in June,” Nasdaq said.

Modifications to the program included priority accommodation for customers of Nasdaq members and making payouts in cash instead of trading credits as originally proposed.

The filing of the proposed plan with US regulators marked the start of a seven-day comment period during which traders can express their views.

Nasdaq said it expected all claims covered by the plan to be paid out within six months.

The stock hit a high of $45 on the first day, but since then has lost nearly 30% from the IPO, slipping to $28.71 in after-hours trading Friday.

The plan requires the approval of the Securities and Exchange Commission, and the independent Financial Industry Regulatory Authority will evaluate claims from the brokers, Nasdaq said.

Facebook’s IPO overwhelmed Nasdaq’s systems when it hit the market, forcing a half-hour delay in opening trading and leaving investors and brokers in the dark for hours over the results of orders involving millions of shares.

Claims of losses related to the market’s computer problems are estimated above $100 million, according to The Wall Street Journal.

The glitch dealt a black eye to the exchange, which trades some of the world’s largest companies, including Apple and Microsoft.

It also sparked reports that the NYSE was trying to woo Facebook away from Nasdaq.

source: japantoday.com

Reports: UBS May Have $350M Facebook Trade Losses

NEW YORK (AP) — Swiss bank UBS AG may have lost as much as $350 million due to technical glitches on the Nasdaq stock exchange the day Facebook went public, according to reports published Friday.

CNBC and The Wall Street Journal, citing people familiar with the matter, reported that UBS is considering legal action against Nasdaq as a result.

UBS spokeswoman Karina Byrne confirmed that the bank lost money due to Nasdaq's technical issues when the social networking company's stock began trading on May 18.

Byrne declined to disclose the amount but said it was "not material" to the bank. She said UBS has not taken legal action but is weighing its options for recovering its losses.

"Given the size of our U.S. equities business and our role as a major market maker, UBS was affected by these issues, as we believe other market participants may have been," Byrne said in a statement.

Nasdaq declined comment on the reports Friday.

The $350 million figure dwarfs previous estimates for the combined losses resulting from technical glitches at Nasdaq during Facebook's first day of trading. This week, the exchange said it would hand out $40 million in cash and credit to reimburse investment firms.

Facebook Inc.'s initial public stock offering was one of the most widely anticipated market debuts in years. But it quickly turned chaotic.

The opening was delayed by half an hour. Then, technical problems kept many investors from buying shares in the morning, or selling them later in the day, or even knowing whether their orders went through. Some investors complained they were left holding shares they didn't want.

According to CNBC and the Journal, UBS placed an order for 1 million shares but did not receive confirmations and repeated the order several times. So it ended up with much more stock than it intended.

Facebook's stock originally priced at $38 and closed that first day at $38.23, disappointing those hoping for a first-day surge. Nasdaq has said it was embarrassed by the glitches but that they didn't contribute to the underwhelming returns.

source: nytimes.com