U.S. shares score solid gains but Facebook flops
NEW YORK — US shares racked up strong gains Monday with the Nasdaq adding nearly 2.5 percent helped by an Apple surge, but Facebook shares flipped below their IPO price on their first full day of trading.
Jumps in the prices of the Nasdaq’s two largest companies — Apple and Google — drove the composite index higher.
But trade was heaviest by far in Facebook, the Nasdaq’s newest member and third-largest company, with its shares plummeting 11 percent.
The Dow Jones Industrial Average finished up 135.10 points, or 1.09 percent, to 12,504.48.
The S&P 500-stock index climbed 20.77 (1.60 percent) to 1,315.99, while the tech-rich Nasdaq added 68.42 (2.46 percent) at 2,847.21.
Facebook, which sold 541 million shares to the public on Friday at $38 a share, sank from the opening and ended the day down 11 percent at $34.03.
“Retail investors are scared. Most people thought this was a hot deal, and now that it’s not, no one knows where the bottom is,” said Lou Kerner of the Social Internet Fund.
“Underwriters generally support the stock at the offering price, and that support now appears to be exhausted.”
Meanwhile positive analysts reports gave Apple a 5.8 percent jump and Google rose 2.3 percent after Chinese antitrust regulators signed off on the company’s $12.5 billion purchase of Motorola Mobility.
Motorola Mobility jumped 2.0 percent.
On the New York Stock Exchange, JPMorgan Chase led the trade, losing 2.9 percent as chief executive Jamie Dimon announced the company would suspend its share buyback program as it focused on cleaning up the problems in its in-house trading operations, the source of a $2 billion loss reported on May 10.
Electrical equipment manufacturer Cooper Industries jumped 14 percent on the news that it would be bought by Eaton Corp for $11.8 billion in cash and stock, a 29 percent premium on the Friday closing price.
Eaton shares fell 0.7 percent.
Lowe’s Companies, the nation’s second-largest home-improvement retailer, sank 10.1 percent after reporting better-than-expected profit in the first quarter but lowering its full-year forecast.
The bond market was mixed. The yield on the 10-year Treasury rose to 1.74 percent from 1.70 percent Friday, while the 30-year was flat at 2.79 percent.
Bond prices and yields move in opposite directions.