Messy Facebook debut marks weak day on Wall Street

by May 19, 2012

NEW YORK (Reuters) - U.S. stocks fell on Friday after a sloppy debut by Facebook Inc spoiled hopes that a spectacular open for the most-anticipated stock sale in years would brighten the mood in what has been a gloomy month for equity markets.

Shares of Facebook, the social networking giant, were volatile in the busiest day ever for a trading debut. After early gains of more than 10 percent, Facebook shares fell back to the $38 issue price, ending up just 0.6 percent at $38.23.

It was the Nasdaq's most actively traded stock, with more than 566 million shares traded.

"When Nasdaq started running into some problems early on before Facebook opened - when there was a sense they kept putting it off, putting it off, the market did come under a little bit of pressure because people were getting nervous about it," said Ken Polcari, managing director at ICAP Equities in New York.

The S&P 500 dipped below 1,300, seen as a key support level, for the first time since mid-January. Investors were cautious before leaders of the Group of Eight nations met about the euro zone debt crisis.

After delays in the scheduled start of Facebook trading raised anxiety levels among traders and onlookers outside Nasdaq's headquarters, the stock opened at $42.05, compared with an initial public offering price of $38 a share. It rose as high as $45 before pulling back.

Investors were left in the dark about whether their buy and sell orders on Facebook went through as the Nasdaq did not tell broker/dealers whether opening trades had been executed. Nasdaq did not disseminate execution data until 1:50 p.m. (1750 GMT).

"The fact that there is this much interest in a big capital raise, an event like this is good for the markets overall," said Gordon Charlop, a managing director at Rosenblatt Securities in New York.

The S&P 500 fell for a sixth straight day and recorded its worst week since November on growing concerns that global growth will suffer from the euro zone's problems and signs of a slowing U.S. recovery.

The broad index has dropped 7.3 percent so far in May.

The Dow Jones industrial average .DJI dropped 73.11 points, or 0.59 percent, to 12,369.38. The Standard & Poor's 500 Index .SPX lost 9.64 points, or 0.74 percent, to 1,295.22. The Nasdaq Composite Index .IXIC fell 34.90 points, or 1.24 percent, to 2,778.79.

For the week, the Dow fell 3.5 percent, the S&P 500 declined 4.3 percent and the Nasdaq was down 5.3 percent.

Markets are awaiting the G8 meeting when leaders of the world's major industrial economies convene near Washington this weekend.

They will confront the continuing crisis in the euro zone, including the increasing likelihood of a Greek departure from the bloc.

"Domestically we are kind of in a lull in a sense that we are between Fed periods and earnings, so to try to find direction, one of the things that seems to be jumping up at guys is macro, global. And right now that's not wonderful," said Charlop.

Shares of companies in the online social media sphere declined. LinkedIn (LNKD.N) fell 5.7 percent to $99.02 and Groupon Inc (GRPN.O) lost 6.7 percent to $11.70. Zynga (ZNGA.O) plunged 13.4 percent to $7.16 after being halted twice during the session.

Biotechs stumbled, weighed down by an 10.9 percent drop in Sequenom Inc (SQNM.O) to $4.25 after the company said insurer Coventry Health Care Inc (CVH.N) terminated an agreement to provide coverage for a prenatal test for Down Syndrome. The NYSEArca biotech index .BTK dropped 2.2 percent.

Shares of Foot Locker (FL.N) jumped 8.3 percent to $30.33 after the athletic footwear retailer posted higher-than-expected quarterly results.

Winnebago Industries Inc (WGO.N) advanced 1.8 percent to $8.66 after receiving an unsolicited buyout offer from North Street Capital LP, the investment firm of racing car enthusiast Alex Mascioli, valuing the No. 1 U.S. motor home maker at $321.5 million.

Volume was strong with about 8.8 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the daily average of 6.83 billion.

Declining stocks outnumbered advancing ones on the NYSE by 2,297 to 728, while on the Nasdaq, decliners beat advancers 1,791 to 699.

(Editing by Kenneth Barry)

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