Can the Facebook IPO Lift the Dow?
LONDON -- After a day in which economic news disappointed and the Dow Jones Industrial Average (INDEX: ^DJI) ended the session down by more than 1%, the futures market suggests today could see a slight rebound from yesterday's lows.
With no economic news or major company results due today, European developments and the long-awaited Facebook (NAS: FB) IPO are likely to dominate market proceedings, alongside any news from the G8 summit at Camp David.
Facebook shares will begin trading at $38 today, having raised $16 billion for the company. The initial offer places a market cap of more than $100 billion on Facebook, making this one of the biggest IPOs in U.S. history.
Facebook's high initial price means there are mixed opinions among analysts as to whether the stock will experience the traditional first-day "pop." News reports are suggesting that early institutional investors such as Goldman Sachs are planning to sell more of their shares than originally planned, when trading starts.
News from Europe is less optimistic, with Moody's downgrade of 16 Spanish banks putting the sector under pressure across Europe. In London, banking shares led the fallers in the FTSE 100 (INDEX: ^FTSE) , with Royal Bank of Scotland and Lloyds Banking Group falling more than 3% on very high volumes, and leaving the British benchmark index down by more than 0.5% at noon.
Elsewhere, weak economic data from China helped drive Brent crude to a new low for this year of $106, while yields on German and U.K. 10-year government bonds dropped to lows of 1.396% and 1.81%, respectively.
In Greece, a new opinion poll suggests the recent turmoil may have dampened the population's enthusiasm for leaving the euro. Support for the mainstream New Democracy party rose to 26.1%, with ratings for the PASOK party suggesting the two pro-austerity parties would have enough votes to form a coalition government, squeezing out the anti-austerity Syriza party. Last week, a similar poll placed Syriza in first place, contributing to the widespread falls in European markets this week.
In company news, Berkshire Hathaway (NYS: BRK.A) (NYS: BRK.B) is to buy 63 newspapers from Media General for $142 million. This is small change for Berkshire CEO Warren Buffett, who recently invested more than $1 billion in a leading British blue-chip brand with global expansion potential. You can discover the identity of the company and the price he paid in this special free report.
Stocks that may be active in early trading include salesforce.com and Gap, both of which rose in after-market trading last night following solid earnings releases. In pre-market trading this morning, salesforce.com was up again, as were banks Morgan Stanley and JPMorgan Chase.
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At the time this article was published Roland Head owns no shares mentioned in this article. The Motley Fool owns shares of JPMorgan Chase, salesforce.com, and Berkshire Hathaway. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway, Moody's, and salesforce.com and creating a bear put spread position in salesforce.com. The Motley Fool has a disclosure policy.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.