Dow up, facebook falls
NEW YORK (AP) — After a weekend that brought both fresh concerns about Europe and hopeful signs about China, investors decided to focus on the latter.
The Dow rose 109 points, or 0.9 percent, to 12,478 shortly after noon Monday. That was a marked change from its recent performance: It fell for the previous six trading days, and last week marked its worst weekly performance since November.
If the Dow finishes the day with a gain, it will be only its third up day for the month of May.
Facebook plunged 11 percent on its second day as a public company to $33.95, below Friday’s initial public offering price of $38. Its market debut was also marred by technical problems.
The other major stock indexes, the Standard & Poor’s 500 and the Nasdaq composite, also climbed after long droughts.
Investors latched on to weekend statements from China’s Premier Wen Jiabao, who promised to boost the country’s consumption rather than just try to curb inflation. China, the world’s second-largest economy, has been instrumental in maintaining global growth as other parts of the world have stumbled through the past couple of years. Economic growth fell to 8.1 percent in the first quarter — a point of envy for most other countries, but a three-year low for China.
Overall, May has brought a change of fortune for the market following a red-hot first quarter. The Dow rose 8 percent in the first three months of the year, on top of a 12 percent gain from October through December, as investors grew less concerned about a budget standoff in Congress and the debt problems in Europe. But now those same worries are resurfacing. After a flat April, the Dow is down 6 percent so far in May. More than three-quarters of its gains from January to March have been erased.
Monday was different. The Standard & Poor’s 500 index rose 16 points to 1,312. The Nasdaq composite rose 57 to 2,836.
It wasn’t clear if the gains represented a corner turned or a temporary moment of relief. Concerns about Europe flowed freely even after the weekend’s Group of Eight summit at Camp David, where world leaders promised to search for ways to promote growth in debt-riddled Europe rather than just cutting costs.
Germany’s deputy finance minister on Monday derided a plan that would require Germany and other stronger European countries to fund “Eurobonds” that would prop up Greece and Portugal. Bankia, a bank nationalized by the Spanish government, was ordered to come up with more money for possible bad loans.
A report from the National Association for Business Economists seemed to provide another flash of good news, showing that economists are predicting modest growth for the remainder of the year, with the pace picking up in 2013.
Even that mildly cheerful report was conditional. The 54 economists who took part in the survey also said they expect consumer spending, business investment and gross domestic product will remain below historic norms.
Elsewhere, oil prices rose after Iraq’s central government told its Kurdish leaders that they must get approval for their oil deals with Turkey.
Lowe’s Cos., the world’s second largest home improvement chain, slumped 10 percent after lowering its full-year earnings forecast, raising concerns that some of the hiring and retail sales of the first quarter weren’t signs of the economy actually recovering, but an anomaly caused by an unusually mild winter that encouraged people to do home renovations a few months earlier than they otherwise would.