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Facebook shares continue to sink

May 23 2012 09:33 Sapa

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New York - US stocks gave up early gains and finished mostly flat on Tuesday as investors dumped Facebook shares for a second straight day amid new controversy about the company's $16bn IPO.

A last-minute rebound allowed the S&P 500 to finish in the black, but the other indices counted small losses for the day after the morning trading hours registered strong gains.

The Dow Jones Industrial Average slipped 1.97 points, to finish at 12,502.81.

The broad-based S&P 500 index rose 0.64 to 1,316.63, while the tech-heavy Nasdaq lost 8.13 to 2,839.08.

The markets got early help after the National Association of Realtors reported US existing home sales across all regions in the United States increased in April, by 3.4%, and home prices continued to rise.

Lawrence Yun, NAR chief economist, said the trend "has shifted from a buyers' market to one that is much more balanced, but in some areas it has become a seller's market."

But selling overall clicked in during the afternoon, with a rebound in only the last 10 minutes of trade preventing significant losses for the day.

Bank shares were strong, with JPMorgan Chase, under pressure over its derivatives trading losses, surging 4.6%.

It was followed by Bank of America, up 2.2%, and Citigroup, adding 2.6%.

Facebook action dominated Nasdaq trade again, the share falling another 8.6% in its third day of trade as accusations flew that leading underwriters had cut their projections days ahead of the initial public offering Friday.

The shares fell as far as $30.94, and closed at $31.12, leaving them 18.1% below the $38 IPO price.

Google finalised its $12.5bn deal for Motorola Mobility, hoping that the purchase of the smartphone maker will give it a stronger, lasting position in the wireless industry.

Google shares fell 2.2% after having risen a similar amount the day before.

Shares in US cloud-based e-commerce firm Ariba zoomed up 19.2% after German business software giant SAP announce it would buy the company for $4.3bn.

The bond market retreated. The yield on the 10-year Treasury rose to 1.79% from 1.74% on Monday, while the 30-year climbed to 2.89% from 2.79%t.

Bond prices and yields move in opposite directions.

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