U.S. Stocks Reverse Gain in Final Hour on Greece Woes

By Rita Nazareth - May 23, 2012 4:44 AM GMT+0700

U.S. stocks erased gains in the final hour of trading as concern that Greece would exit the euro and a tumble in Facebook (FB) Inc. shares overshadowed economic optimism.

Commodity and technology shares in the Standard & Poor’s 500 Index fell, while financial companies gained. Facebook slumped 8.9 percent, dropping 19 percent in two days. A gauge of homebuilders in S&P indexes rose 1.9 percent amid a better-than- estimated housing report. Best Buy Co. (BBY) rallied 1.6 percent after reporting first-quarter profit that exceeded estimates. Dell Inc. tumbled 12 percent at 5:43 p.m. New York time after forecasting revenue that missed analysts’ projections.

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The Facebook Inc. logo is displayed in front of the company's headquarters in Menlo Park, California. Photographer: David Paul Morris/Bloomberg

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May 22 (Bloomberg) -- Bloomberg's Deborah Kostroun reports on the performance of the U.S. equity market. U.S. stocks erased earlier gains as concern that Greece would exit the euro and a tumble in Facebook Inc. shares overshadowed economic optimism. (Source: Bloomberg)

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May 22 (Bloomberg) -- Bloomberg's Trish Regan, Adam Johnson and Alix Steel report on today's ten most important stocks including Best Buy, Urban Outfitters and Dell. (Source: Bloomberg)

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May 22 (Bloomberg) -- U.S. stock-index futures were little changed after the benchmark Standard & Poor’s 500 Index posted its biggest gain in two months. (Source: Bloomberg)

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Traders work at the New York Stock Exchange. Photographer: Scott Eells/Bloomberg

About three stocks fell for each rising on U.S. exchanges at 4 p.m. New York time. The S&P 500 added 0.1 percent to 1,316.63, almost erasing a gain of 1 percent. The Dow Jones Industrial Average lost 1.67 points, or less than 0.1 percent, to 12,502.81. About 7.3 billion shares changed hands on U.S. exchanges, or 8.2 percent above the three-month average.

“Stocks did a 180,” said Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama. “On a relative basis, the U.S. is the cleanest dirty shirt. Yet Europe is still a dominant story for the market.”

Stocks erased gains after Dow Jones reported that former Greek Prime Minister Lucas Papademos said the nation is considering preparations to leave the shared currency. European Union leaders are planning to gather in Brussels tomorrow to discuss how to revive growth. Equities rallied earlier today as sales of existing U.S. homes rose in April while investors speculated China and Europe will stimulate growth.

Europe Concern

Concern about Europe’s debt crisis drove the S&P 500 down as much as 8.7 percent from an almost four-year high in April. Still, the benchmark gauge was up 4.7 percent in 2012 amid better-than-estimated economic and corporate reports. About 70 percent of S&P 500 companies that reported first-quarter results beat analysts’ estimates, data compiled by Bloomberg show.

“We went from risk-on to risk off pretty quickly,” said Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co. “Greece is not a major economy, but there’s obviously fear of contagion in case it exits the euro. These outside factors will weigh on the market even as economic numbers are good.”

Measures of commodity shares in the S&P 500 had the biggest losses among 10 groups. Crude oil slipped as Iran agreed to let Western nuclear inspectors into the country, easing concern that the conflict over its atomic energy program would disrupt Mideast supplies. Gold and copper also retreated.

Coal Producers

Patriot Coal Corp. (PCX) slumped a record 35 percent to $2.18. The U.S. miner that last week warned of a possible customer default hired Blackstone Group LP and said it’s still working with lenders to finalize $625 million of loan and credit facilities. Peabody Energy Corp. (BTU) lost 3.9 percent to $23.65. Alpha Natural Resources Inc. (ANR) retreated 3.9 percent to $11.21.

Technology shares, which comprise 20 percent of the S&P 500, also retreated. Apple Inc. (AAPL), the world’s most valuable company lost 0.8 percent to $556.97. The shares rose as much as 2.2 percent earlier today.

Facebook, the social networking site that raised $16 billion in an initial public offering last week, plunged 8.9 percent to $31. The offering valued Facebook at 107 times trailing 12-month earnings, more than every S&P 500 member except Amazon.com Inc. and Equity Residential. The slump reinforces concern that the IPO was priced too high.

Too High

Sentiment toward the offering worsened yesterday after Facebook fell below the $38 price set by underwriters, burning investors who speculated the company would mimic IPOs such as LinkedIn Corp. (LNKD), which doubled on its first day. While bulls forecast benefits as companies shift advertising to the Internet, Brian Wieser of Pivotal Research Group LLC, said Facebook’s price is too high and the path to growth unclear.

“There’s always a risk of buying into excessive hype, using rules of thumb for valuation that are divorced from fundamentals,” Wieser, a New York-based analyst at Pivotal, said in a telephone interview yesterday. “There are many things that really speak to the uncertainty investors should be incorporating when they’re thinking about Facebook.”

Dell slumped 12 percent to $13.30 after the close of regular trading. The world’s third-largest personal computer maker lost share in the global PC market in the first three months of the year, according to market researcher Gartner Inc. Dell (DELL) has eschewed sales of less profitable PCs to boost its profit margin, which is causing revenue to slump, said Shaw Wu, an analyst at Sterne Agee & Leach Inc. in San Francisco.

Homebuilders, Banks

Homebuilders rallied as PulteGroup Inc. (PHM) advanced 2.5 percent to $9.08, while Lennar Corp. (LEN) increased 2.2 percent to $27.61. A measure of diversified financial shares had the biggest advance among 24 groups in the S&P 500, gaining 1.4 percent. The KBW Bank Index (BKX) rose 1.1 percent as 22 of its 24 stocks advanced.

JPMorgan Chase & Co. (JPM) jumped 4.6 percent to $34.01, rebounding from a 20 percent plunge following its May 10 disclosure of at least $2 billion in trading losses. Goldman Sachs Group Inc. reiterated its buy rating on the stock today, saying the company’s plan to halt share buybacks reflects a “prudent decision” to preserve capital given the volatility and uncertainty around its chief investment office’s holdings.

Best Buy added 1.6 percent to $18.46. The largest U.S. consumer-electronics retailer lured customers with discounts on smartphones, part of former Chief Executive Officer Brian Dunn’s efforts to compete with Amazon.com Inc. Lower demand for televisions and notebook computers reduced comparable-store sales in the quarter by 5.3 percent.

Urban Outfitters

Urban Outfitters Inc. (URBN) climbed 7.4 percent, the biggest gain in the S&P 500, to $28.10. The retailer that rehired co-founder Richard Hayne as chief executive officer this year reported first-quarter profit that beat analysts’ estimates on record sales.

Ralph Lauren Corp. (RL) added 2.7 percent to $150.27. The retailer of its namesake brand clothing reported profit that beat analysts’ estimates because of sales gains at its own shops and department stores.

Ariba Inc. (ARBA) surged 19 percent to $44.87, the highest level since 2002. SAP AG, the largest business-management software maker, agreed to buy the online-trading platform for businesses for $4.3 billion in the German company’s biggest push into cloud computing.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editors responsible for this story: Nick Baker at nbaker7@bloomberg.net; Michael P. Regan at mregan12@bloomberg.net

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Facebook Tumble Means Morgan Stanley Gets Blame for Flop

By Serena Saitto, Lee Spears and Joseph Ciolli - May 23, 2012 3:17 AM GMT+0700

Let the Facebook Inc. (FB) finger-pointing begin.

After one of the most anticipated initial public offerings in history, Facebook’s 19 percent drop this week prompted investors to fault everything from Morgan Stanley’s role as lead underwriter, to the company’s greed and the Nasdaq Stock Market.

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People walk by the Nasdaq stock market in New York, on May 18, 2012. Photographer: Spencer Platt/Getty Images

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May 22 (Bloomberg) -- Jeff Corbin, chief executive officer of KCSA Strategic Communications, talks about the 19 percent decline in Facebook Inc.'s shares following the company's initial public offering. Corbin speaks with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg)

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May 21 (Bloomberg) -- Paul Kedrosky, author of the Infectious Greed blog and a Bloomberg contributing editor, and Max Wolff, an analyst at Greencrest Capital Management, talk about trading in shares of Facebook Inc. Facebook fell below its $38 offer price in the second day of trading. Kedrosky and Wolff speak with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

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May 21 (Bloomberg) -- Darren Chervitz, research director for Jacob Funds, talks about Facebook Inc.'s stock price performance and the outlook for the social network firm. Facebook, the social networking site that raised $16 billion in an initial public offering, fell below its $38 offer price in its second trading day. Chervitz speaks with Trish Regan on Bloomberg Television's "InBusiness." (Source: Bloomberg)

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May 22 (Bloomberg) -- Bloomberg's Dominic Chu reports that after one of the most anticipated initial public offerings in history, Facebook’s 11 percent drop on Monday prompted investors to fault everything from Morgan Stanley’s role as lead underwriter, to the company’s greed and the Nasdaq Stock Market. He speaks on Bloomberg Television's "Inisde Track." (Source: Bloomberg)

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May 22 (Bloomberg) -- Cliff Lerner, chief executive officer of Snap Interactive Inc., talks about the impact of the drop in Facebook Inc.’s shares on Snap's stock. Lerner talks with Trish Regan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

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The Facebook Inc. logo is displayed at the Nasdaq MarketSite in New York, on May 18, 2012. Photographer: Scott Eells/Bloomberg

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A pedestrian walks past the share price for Facebook Inc. displayed at the Nasdaq MarketSite in New York, U.S., on Monday, May 21, 2012. Photographer: Scott Eells/Bloomberg

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Facebook Inc. Chief Financial Officer David Ebersman, seen here, was the point person on the deal, while Mark Zuckerberg and Chief Operating Officer Sheryl Sandberg weighed in on major decisions throughout the process, people said. Photographer: Tony Avelar/Bloomberg

“It was like the gang that couldn’t shoot straight,” said Michael Mullaney, who helps manage $9.5 billion as chief investment officer at Fiduciary Trust in Boston. He said he placed Facebook orders for clients. “The underwriters mis- estimated what actual demand was, and there was pure execution failure coming out of the Nasdaq.”

Taking the most heat is Morgan Stanley, said Mullaney. The bank was lead underwriter among the 33 firms Facebook hired to manage the $16 billion sale of stock. The bank decided with Facebook executives to boost the size and price days before the May 17 IPO, ignoring advice from some co-managers, said people with knowledge of the matter, who declined to be identified because the process was private. Morgan Stanley (MS) talked with few of its fellow underwriters aside from JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS) throughout the IPO, one person said.

“They overplayed the enthusiasm and probably just misread the atmosphere of the marketplace,” said Keith Wirtz, who oversees $15 billion as chief investment officer at Fifth Third Asset Management in Cincinnati and bought some stock in the IPO.

Blame Game

Facebook increased the number of shares being sold in the IPO by 25 percent last week to 421.2 million and raised its asking price to a range of $34 to $38 from $28 to $35. Had Facebook kept the original terms, investors may have had a better shot at a first-day pop. Instead, the stock was little changed in its debut because Morgan Stanley intervened to prevent it from falling below the IPO price.

The shares fell 8.9 percent to $31 at the close today, after an 11 percent drop yesterday.

Just days before Facebook raised the size and price of its IPO, the company began telling analysts to lower their sales forecasts, people familiar with the matter said. Morgan Stanley analysts were among those who cut their projections during the roadshow, said one person. The move also followed a May 9 filing in which Facebook said advertising growth hasn’t kept pace with the increase in users.

Investors Misled?

Some investors say they felt misled by the underwriters. According to one London-based fund manager who asked not to be named, bankers indicated demand was so strong that he placed a bigger order than he thought he would get, leaving him with 40 percent more Facebook shares than anticipated. He sold most of that stock on the first day of trading.

The decision to boost the price range reflected the demand in the market, said a person involved in the process. Michael DuVally, a spokesman for Goldman Sachs, and Pen Pendleton, a spokesman for Morgan Stanley, declined to comment. Jennifer Zuccarelli, a spokeswoman for JPMorgan, declined to comment. Underwriters didn’t say how great demand was.

Morgan Stanley and Facebook consider problems with Nasdaq OMX Group Inc.’s computer systems among the reasons for the IPO’s performance so far, according to people familiar with the matter. Nasdaq’s trading platform was overwhelmed by order cancellations and updates that made the stock-market operator unable to finish the auction required to open trading. The U.S. Securities and Exchange Commission said it will review the trading.

Nasdaq Software

Nasdaq Chief Executive Officer Robert Greifeld said on a call with reporters on May 20 about the glitch that the opening delay “had no apparent impact on the stock price,” noting the share decline began after all brokers had received confirmation about their trades in the opening auction. Robert Madden, a spokesman for Nasdaq OMX, declined to comment beyond Greifeld’s statement.

Nasdaq said in a notice yesterday it delivered all outstanding execution and cancellation messages to brokers for their IPO cross orders at 1:50 p.m. Facebook declined 5.9 percent after 1:50 p.m.

Facebook CEO Mark Zuckerberg and the early backers should be held accountable for the stock drop, said Francis Gaskins, president of researcher IPOdesktop.com in Marina Del Rey, California. Goldman Sachs, Accel Partners, Digital Sky Technologies and other existing holders boosted the number of IPO shares they offered in Facebook on May 16, a day after the company increased its price range.

‘Mispriced’ Market Value

“It’s a combination of Zuckerberg’s ego for that $100 billion market cap, and the shareholders selling who wanted an exit,” said Gaskins. “Somehow it just missed them that this was mispriced.”

Larry Yu, a spokesman for Menlo Park, California-based Facebook, declined to comment. Rich Wong, a partner at Palo Alto-based Accel Partners, and Yuri Milner, founder of Digital Sky Technologies in Moscow, didn’t respond to requests for comment.

Facebook Chief Financial Officer David Ebersman was the point person on the deal, while Zuckerberg and Chief Operating Officer Sheryl Sandberg weighed in on major decisions throughout the process, people said. At Morgan Stanley, Dan Simkowitz, chairman of global capital markets, was one of the main bankers on the offering. Michael Grimes, global co-head of technology investment banking at Morgan Stanley, also played a key role.

Underwriters did accomplish part of what they set out to do: turn paper into cash for pre-IPO holders.

“It was successful for the liquidating owners, absolutely, because they got all that and then some,” said Peter Sorrentino, a fund manager who helps oversee $14.7 billion at Huntington Asset Advisors in Cincinnati.

For the investors it was a different story.

“I shame the people who were lining up to buy the thing,” said Sorrentino, whose firm didn’t buy stock in the IPO and tried to talk clients out of purchases. “The financials were there, do the math. Everyone wanted to be caught up in the glamour offering of the year. People just had stars in their eyes.”

To contact the reporters on this story: Serena Saitto in New York at ssaitto@bloomberg.net; Lee Spears in New York at lspears3@bloomberg.net Joseph Ciolli in New York at jciolli@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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Facebook Investor Sues Nasdaq Over Delays in Offering

By Bob Van Voris - May 23, 2012 5:28 AM GMT+0700

A Facebook Inc. (FB) investor sued Nasdaq OMX Group Inc. (NDAQ) claiming the stock exchange “badly mishandled” Facebook’s initial public offering, delaying trading and failing to cancel orders when requested by customers.

Phillip Goldberg, a Maryland investor, said in a complaint filed today in Manhattan federal court that he tried to both order and cancel requests for Facebook shares through an online Charles Schwab Corp. (SCHW) account the morning after the May 17 IPO. He is seeking to represent a class of investors who lost money because their buy, sell or cancellation orders for Facebook stock weren’t properly processed, according to the filing.

“Orders placed by investors seeking to purchase Facebook shares during the first trading day often took hours to execute,” Goldberg said in the complaint. “In the meantime, the investors seeking to purchase those shares had no idea if their trades had executed, and, accordingly, had no idea if they owned Facebook shares at all.”

Goldberg, who claims Nasdaq acted negligently, is seeking unspecified damages. The U.S. Securities and Exchange Commission has said it will review the opening day of trading in Facebook shares on Nasdaq. The exchange has blamed poor design in the software used to drive auctions in IPOs.

Public Trading

Robert Madden, a spokesman for Nasdaq, didn’t immediately return a call seeking comment on the suit. Ashley Zandy, a spokeswoman for Facebook, the world’s biggest social network, declined to comment on the suit.

Goldberg claims that on May 18, he tried to make a series of limit buy orders through his online account. The trades failed to execute and he tried to cancel. Instead of canceling the trades, Goldberg’s account reflected the cancellation orders as “pending” throughout the day, he said.

Goldberg said that even with the cancellation orders, one trade, at $41.23, was executed about three hours after it was placed, when Facebook shares were trading at about $38.

Some investors lost money when their orders to cancel trades weren’t processed, as Facebook’s share price declined and buy orders were executed at the higher, earlier prices, Goldberg claimed. Others weren’t able to determine whether their orders had been executed, making it impossible to sell the shares and avoid losses, he said.

Thousands of Investors

Goldberg cited press reports blaming the delays on New York-based Nasdaq and claiming that as many as 30 million Facebook shares were affected. He said there are thousands of investors in the class he seeks to represent in the suit.

Goldberg alleged that Nasdaq was negligent in failing to ensure trades were executed quickly and correctly, in not exercising effective quality control and in failing to oversee employees and contractors involved in executing the trades.

Facebook, which raised $16 billion in its initial public offering, fell 8.9 percent to $31 today at 5:20 p.m. New York time. The price was $7 below Facebook’s $38 offer price.

The IPO valued the Menlo Park, California-based company company at $104 billion.

The case is Goldberg v. Nasdaq OMX Group Inc., 12-CV-04054, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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Shale Glut Means $1-a-Gallon Savings at the Pump

By Eduard Gismatullin and Jeremy van Loon - May 22, 2012 9:59 PM GMT+0700

Tomohiro Ohsumi/Bloomberg

A liquefied natural gas (LNG) tanker operated by Energy Advance Co., a unit of Tokyo Gas Co., is moored at the company's Sodegaura plant in Sodegaura City, Chiba Prefecture, Japan, on Thursday, March 22, 2012.

Chad Porter wants to run his 18- wheeler trucks on frozen natural gas along a highway that crosses Canada’s Rocky mountains even before the world’s longest chain of refueling stations gets built to keep them fueled.

The chief operating officer of oil services company Ferus Inc. bought two vehicles to test liquefied natural gas and reckons switching from diesel may cut 22 percent from his fuel bill, or about $1 a gallon. At the moment, Calgary-based Ferus uses mobile tankers to refuel his trucks, which cost about C$100,000 ($99,000) more than conventional vehicles, adding expense to a project that’s about saving money. A Royal Dutch Shell Plc (RDSA) project will make it easier to fill up.

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A Shell natural gas liquefying plant. Source: Shell

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“Gas in our view will be the fuel of the future,” said Royal Dutch Shell Plc Chief Executive Officer Peter Voser. Photographer: F. Carter Smith/Bloomberg

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Shell’s plan to spend $250 million on an LNG plant and a string of filling stations is the biggest single investment yet in making frozen gas a transport fuel, a shift advocated by proponents of energy independence including billionaire investor T. Boone Pickens. Photographer: Jacob Kepler/Bloomberg

Shell’s plan to spend $250 million on an LNG plant and a string of filling stations is the biggest single investment yet in making frozen gas a transport fuel, a shift advocated by proponents of energy independence including billionaire investor T. Boone Pickens. Switching engines to run on LNG is becoming economic because a glut of fuel from North America’s shale rocks has made the U.S. the world’s largest natural-gas producer and forced prices to record discounts versus crude oil.

“LNG holds great potential as a transport fuel,” Mark Williams, Shell’s director for downstream, said in a speech this month. “North America, for example, now has a century of gas supplies at current consumption rates. So gas is likely to gain market share in transportation.”

Special Coolers

Using LNG in vehicles has limitations, from fuel evaporation to the special coolers needed at filling stations to keep the gas at minus 162 degrees Celsius (minus 259 Fahrenheit), making it mostly suitable for long-haul trucks with large gas tanks. U.S. truckers spent more than $135 billion on fuel last year, according to American Trucking Association.

“We would take advantage of any infrastructure that gets built,” Ferus’s Porter said in an interview from his office in Calgary.

Shell agreed to work with filling-station owners Flying J Inc. to offer LNG to trucks along the highway, from Fort McMurray in Alberta, the heart of Canada’s oil industry, to Vancouver on the Pacific coast, more than 900 miles (1,600 kilometers) to the southwest. At today’s diesel prices, fuel for each run on the route by a typical 33,000-pound, 60-foot truck costs about C$550.

The roadway, which comes within about 235 miles of Mt. Robson, the range’s highest peak at 12,972 feet, passes through part of Canada’s oil and gas producing region, as well as the mining and forestry operations of companies including Teck Resources Ltd. (TCK/B)

‘See Opportunities’

“We see opportunities for a concept like this one in other areas of the world as well,” said Jose-Alberto Lima, Shell’s vice president for LNG and gas sales in Americas. He said Shell, based in The Hague in the Netherlands, doesn’t expect a rebound in gas prices anytime soon.

In addition to being cheaper, natural gas burned in trucks emits as much as 25 percent less carbon dioxide, as well as almost eliminating particulate matter and sulfur dioxide produced by diesel-powered vehicles, according to the Calgary- based Van Horne Institute. Using natural gas, a fuel where North America is self-sufficient, would also cut demand for imported crude oil.

Shell eventually plans to deploy LNG technology to power trains, ships and mining industry engines. Gas overtook crude oil to account for more than 50 percent of the company’s production for the first time this year. It expects to expand the use of LNG as a transport fuel beyond North America to Europe, China, Latin America and Australia.

Future Fuel

“Gas in our view will be the fuel of the future,” Shell Chief Executive Officer Peter Voser told shareholders today. The company has more than 40 trillion cubic feet of gas resources in North America, about 12 percent of the continent’s total at the end of 2010, based on data from BP Plc (BP/)’s Statistical Review of World Energy.

The Anglo-Dutch company’s Green Corridor project in Canada will make 300,000 tons of LNG a year. It plans to start production at its first small-scale gas liquefaction plant at Jumping Pound near the route’s halfway point next year.

“These trucks are more expensive than the traditional diesel trucks today,” Shell’s Lima said. “You need to have economies of scale to bring these costs down.”

Shell is cooperating with Vancouver-based Westport Innovations Inc. (WPT), the maker of cryogenic fuel tanks and the only currently available 15-liter gas-powered engine suitable for heavy-duty trucks running on LNG.

Compressed Gas

The second Canadian maker of gas powered engines is Cummins Westport Inc., which makes smaller 8.9 liter heavy-duty unit. The Vancouver-based joint venture of U.S.’s Cummins Inc. (CMI) and Westport has designed a motor able to run on either compressed natural gas, CNG, or LNG.

CNG is used for light- and medium-duty vehicles, such as buses and garbage trucks. LNG, which is using a cryogenic technology to chill gas and reduce it to one-six-hundredth of its original volume at low temperature, is offered mostly as a fuel for heavy-duty vehicles.

CNG, which is stored at ambient temperature, requires tanks with thicker walls to hold the pressure and provides less energy per volume. Therefore, long-haul trucks can take more LNG on board in lighter chilled tanks with less time required for refueling per energy unit.

“Drivers have been very receptive to LNG trucks, especially since they drive like diesel trucks,” said Cara West, a spokeswoman at Paccar Inc., which designs and manufactures trucks under Kenworth, Peterbilt and DAF nameplates and where Ferus bought its vehicles. “Dealers are receiving multiple inquiries from customers anxious to learn more about LNG trucks.”

Market Share

Paccar currently equips some of its Kenworth and Peterbilt models with LNG engines. The Washington state-based maker expects the gas-powered-truck market share in North America to expand to about 20 percent in the next several years, up from about 6 percent now.

With natural gas fuel taxed about 20 Canadian cents less a liter than diesel on equivalent basis, it takes less than five years for a driver to return extra investment benefiting from cheaper fuel, according to the Canadian Natural Gas Vehicle Alliance. Canada has more than 100 LNG powered trucks almost equally split between western and eastern parts of the country operated by Vedder Transport, a milk hauler in British Columbia, and Robert Transport, which operates in Quebec and is expanding the fleet.

In January, President Barack Obama said tax breaks for natural-gas powered trucks will help cut dependence on imported oil in the world’s largest crude-consuming country. “We, it turns out, are the Saudi Arabia of natural gas,” Obama said. The U.S Senate and House have been reviewing the bill to boost greater use of the gas.

Huge Resource

“The potential is there, and when you have this huge resource in the U.S., and you’ve got almost 10 million barrels per day imported being used for transportation fuels,” said Theepan Jothilingam, an analyst at Nomura Holdings Inc. At some stage, the U.S. government “will need to give a tax break and encourage both the technology and the execution of this technology.”

Billionaire investor Pickens has been lobbying for incentives to stimulate greater use of natural gas as a vehicle fuel to replace imported oil. Pickens is the largest shareholder of Clean Energy Fuels, a natural-gas supplier for bus and truck fleets, which is building America’s Natural Gas Highway across the U.S. to fuel long-haul trucks with LNG starting from the end of this year.

About 30 percent of U.S. “classic trucks” can be converted to run on LNG, which needs highly utilized vehicles running lots of miles to pay back for the additional engine costs by fueling it with cheaper LNG, said James Burns, Shell’s general manager for LNG in Transport, Americas. “Emissions is a key issue here as well both on local air emissions and green- house gas emissions.”

To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net; Jeremy van Loon in Calgary at jvanloon@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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Zuckerberg’s Fortune Down $2.1 Billion as Facebook Drops

By Pamela Roux and Sarah Frier - May 22, 2012 3:57 AM GMT+0700

Mark Zuckerberg’s fortune dropped $2.1 billion as shares of Facebook Inc. (FB), the world’s largest social-networking company, fell below the company’s $38 offer price in its second day of trading.

The shares sank 11 percent to $34.03 at the close in New York. Zuckerberg is worth $17.3 billion, according to the Bloomberg Billionaires Index.

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Facebook CEO Mark Zuckerberg in San Francisco. Photographer: Kimihiro Hoshino/AFP/Getty Images

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May 21 (Bloomberg) -- Darren Chervitz, research director for Jacob Funds, talks about Facebook Inc.'s stock price performance and the outlook for the social network firm. Facebook, the social networking site that raised $16 billion in an initial public offering, fell below its $38 offer price in its second trading day. Chervitz speaks with Trish Regan on Bloomberg Television's "InBusiness." (Source: Bloomberg)

“If you went out and spent on Friday, you’re not canceling the order for the Lamborghini just yet,” Martin Pyykkonen, an analyst with Wedge Partners in Greenwood Village, Colorado, said in a phone interview. “For the most part, those with a substantial stake still have plenty of value.”

Facebook raised $16 billion in an initial public offering, selling 421.2 million shares for $38 each on May 17. It was the biggest technology IPO in history. The stock was little changed at $38.23 at the close of May 18.

The IPO suffered from trading glitches on its first day. Nasdaq OMX Group Inc. (NDAQ) Chief Executive Officer Robert Greifeld said a “poor design” in software driving auctions for IPOs caused issues with Facebook’s first trading day.

Moskovitz, Saverin

Dustin Moskovitz, 27, who started Facebook with Zuckerberg from their dorm room at Harvard University, owns 133.7 million shares of the company’s Class B stock worth $4.55 billion, down $560 million during the day.

Eduardo Saverin, 30, has a $1.8 billion stake, down $220 million since Friday’s close. According to a regulatory filing dated May 17, he owns 53.1 million shares of the company.

Sean Parker owns 66 million Facebook shares valued at $2.2 billion. The 32-year-old persuaded Zuckerberg to move to California to focus on the company full time in 2004.

Facebook’s chief operating officer Sheryl Sandberg, 42, who was lured from Google in 2008, owns 27 million shares, including 25 million restricted stock units that have vested. They are valued at $920 million. She also owns millions of unvested units not counted in her net worth calculation.

Co-founder Christopher Hughes, 28, who was a billionaire when the company began trading May 18, now commands a nine- figure fortune. He owns about 22 million shares of Facebook, according to a person familiar with his holdings who asked not to be named because the matter is private. His stake is worth $750 million.

Hughes, who bought the Washington, D.C.-based magazine the New Republic in March 2012 for less than $5 million, has more than $100 million in cash and real estate after selling some of his Facebook hoard, according to data compiled by Bloomberg.

To contact the reporters on this story: Pamela Roux in New York at proux3@bloomberg.net; Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net

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Nasdaq Chief Blames Software for Delayed Facebook Debut

By Nina Mehta - May 22, 2012 5:23 AM GMT+0700

Nasdaq OMX Group Inc. (NDAQ), under scrutiny after shares of Facebook Inc. were hit by delays and mishandled orders on its first day, blamed “poor design” in the software it uses for driving auctions in initial public offerings.

Computer systems used to establish the opening price were overwhelmed by order cancellations and updates during the “biggest IPO cross in the history of mankind,” Nasdaq Chief Executive Officer Robert Greifeld, 54, said yesterday in a conference call with reporters. Nasdaq’s systems fell into a “loop” that kept the second-largest U.S. stock venue operator from opening the shares on time following the $16 billion deal.

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The Facebook Inc. logo is displayed with price valuations on monitors during trading at the Nasdaq MarketSite in New York, U.S. Photographer: Scott Eells/Bloomberg

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May 21 (Bloomberg) -- Bart Chilton, a commissioner at the U.S. Commodity Futures Trading Commission, talks about delays in Facebook Inc.'s first day of trading and the impact of high-frequency transactions on stock exchanges. Nasdaq OMX Group Inc., under scrutiny after shares of Facebook were hit by delays and mishandled orders on its first day, blamed "poor design" in the software it uses for driving auctions in initial public offerings. Chilton speaks with Cory Johnson on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

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May 21 (Bloomberg) -- In today's "Movers & Shakers" Bloomberg's Betty Liu reports that Nasdaq OMX Group CEOP Robert Greifeld, under scrutiny after shares of Facebook Inc. were plagued by delays and mishandled orders on its first day of trading , blamed “poor design” in the software it uses for driving auctions in initial public offerings. She speaks on Bloomberg Television's "In The Loop." (Source: Bloomberg)

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May 18 (Bloomberg) -- Mark Zuckerberg, co-founder and chief executive officer of Facebook Inc., David Kirkpatrick, author of "The Facebook Effect," and Brian Wieser, an analyst at Pivotal Research Group LLC, offer their views on Facebook's trading debut and the outlook for the social-networking site. This report also contains comments from Robert McCooey, senior vice president of new listings and capital markets at Nasdaq OMX Group Inc.; Scott Rostan, chief executive officer of Training the Street; John Chachas, managing partner at Methuselah Capital Advisors LP, and Nick Thompson, a senior editor at New Yorker magazine and a Bloomberg contributing editor. (Source: Bloomberg)

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May 18 (Bloomberg) -- Lise Buyer, principal at Class V Group LLC, talks about Facebook Inc.'s first day of trading and the outlook for the social-networking company. Buyer speaks with Cory Johnson on Bloomberg Television's "Facebook the Public Network." (Source: Bloomberg)

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May 21 (Bloomberg) -- Jonathan Slone, chief executive officer of CLSA Asia-Pacific Markets, talks about the outlook for financial markets and the sovereign debt crisis in Greece. Slone also discusses Facebook Inc.'s initial public offering and JPMorgan Chase & Co.'s trading loss with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

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Nasdaq OMX Group Inc. Chief Executive Officer Robert Greifeld. Photographer: Scott Eells/Bloomberg

While the errors were resolved and Facebook completed its offering, the day was another setback for equity exchanges trying to erase the memory of the botched IPO in March by Bats Global Markets Inc., another bourse owner. Nasdaq’s issues contributed to disappointment among investors as Facebook (FB)’s stock plunged as much as 14 percent today.

“It’s amazing that both Bats and Nasdaq unfortunately failed in an inglorious way,” William Karsh, the former chief operating officer at Direct Edge Holdings LLC, an exchange operator that competes with Nasdaq, said in a telephone interview yesterday. “It proves that technology isn’t infallible. There are so many moving parts that things can go wrong. That’s the lesson we learn.”

SEC Reviewing

The U.S. Securities and Exchange Commission said it will review the trading. Jonathan Thaw, a spokesman for Menlo Park, California-based Facebook, declined to comment.

“This was not our finest hour,” Greifeld said yesterday, a day after Nasdaq’s board convened to discuss the offering. Asked if his job is secure, he said, “I certainly hope so.”

Nasdaq will use an “accommodation pool” that may total $13 million to pay back investors that should have received executions in the opening auction, based on the decisions of a third-party reviewer, Greifeld said. Nasdaq said today in a notice that the Financial Industry Regulatory Authority would be the organization handling the review.

Media reports that brokers may lose $100 million repaying investors whose orders were mishandled are credible, Thomas Joyce, the CEO of Knight Capital Group Inc. (KCG), said today on CNBC.

Under Water

Facebook slumped 11 percent to $34.03 today, slipping below its offering price of $38 after advancing as high as $45 on the day of its debut.

The controversy is a black eye for Greifeld, whose venue won out over the New York Stock Exchange in the battle to list Facebook’s offering. While the market capitalization of NYSE shares is about triple the value of Nasdaq companies, the latter market operator has about twice as many technology companies trading for $1 billion or more, data compiled by Bloomberg show

Problems surfaced on May 18 at 11:11 a.m. New York time after Morgan Stanley (MS), one of the underwriters that sold 421 million shares, completed its role in setting the price for the trade in Nasdaq’s opening auction, Greifeld said.

Nasdaq’s software for IPOs allows investors to cancel or update details of orders until the auction runs. Trade requests received during the 5 milliseconds it took to operate the auction disturbed the process, leading to an imbalance of buys and sells and sending the program into a loop.

Manual Intervention

Exchange officials manually intervened to allow the auction to occur at 11:30 a.m. The IPO software “didn’t work” even after thousands of hours of testing for “a hundred scenarios” aimed at anticipating problems, Greifeld said. “We’re not happy with our performance,” he said on the call.

Volume during the auction amounted to 75.7 million shares, or almost 1 percent of trading during the entire day on all U.S. exchanges, according to data compiled by Bloomberg.

“We saw on a real-time basis, obviously with the pressure of the world upon us, that this was happening,” Greifeld said. “We then manually intercepted this cross,” he said. “That manual intervention said we had to ignore the cancels that came in between the raindrops as we were processing the trade.”

Responding to the malfunction, Nasdaq altered its IPO procedures today. The exchange operator said it will no longer accept “cross-eligible” order modifications after the auction’s final price calculation has begun, according to an e- mailed statement.

Facebook Stake

Nasdaq wound up selling 3 million shares of Facebook because of its intervention, according to two people familiar with the events. A broker was used to unwind the position that had been placed in the exchange’s so-called error account for $10.7 million, the people said. Greifeld mentioned the $10 million proceeds yesterday, though he gave a lower share total.

Nasdaq will ask the SEC for permission to add the money it received to the $3 million available from the exchange, according to its rules, to repay investors that should have received trades, Greifeld said on yesterday’s call.

Orders totaling 30 million shares were submitted into the opening auction between 11:11 a.m. and 11:30 a.m., Greifeld said. About half of them may involve “some level of dispute,” he said. Greifeld said he didn’t think the delay in starting trading affected the price of Facebook shares.

Finra Report

Finra will provide a report to Nasdaq OMX about the total value of all “valid claims,” Nasdaq said today. One of the two people said $13.7 million would be a minimum amount that Nasdaq would pay and that Finra’s review process would take one to three weeks.

Adding to the confusion after the IPO started trading, Nasdaq reported an issue with confirming transactions from the opening auction with the brokerages that placed them. The exchange said in a statement posted to its website at 11:59 a.m. New York time that it was having a problem delivering the messages. An update at about 1:57 p.m. said they had been sent.

Nasdaq said today that trading delays in Zynga Inc. (ZNGA) on May 18 were caused by the Facebook malfunction. The stock was halted twice by marketwide volatility circuit breakers that normally last five minutes. One went for about 50 minutes and another was more than an hour.

‘Bizarre Ways’

“When you have a complex market system that gets overwhelmed, it fails in bizarre ways,” James Angel, a finance professor at Georgetown University in Washington, said in a phone interview on May 18. “If you don’t know whether you got filled, you don’t know your position. If you’re buying you might buy more shares and then suddenly you’ve got twice as many shares as you wanted. It makes it hard to do your risk management and hard for brokers to know how much credit to extend to customers.”

Facebook was originally scheduled to open at 11 a.m. At about 11:07 a.m., a Nasdaq official told market participants on a conference call that the exchange was delaying the opening. Aside from assurances that an update was coming, the phone line went silent until just before the first trade at about 11:30 a.m., according to two people who were on the call and asked not to be identified because the discussions were private.

Buy and sell requests that should have been filled in the opening auction, based on the exchange’s rules, weren’t, while cancellations for other trade requests were ignored, they said. Their employers plan to appeal some of the results they received for orders sent to Nasdaq.

Bid and Offer

Nasdaq began experiencing problems with its bid and offer quotes after the opening auction trade. By 11:31 a.m., the exchange’s highest bid, or price at which market participants were willing to purchase shares, was $42.99, and its lowest offer to sell was $42.50, according to data compiled by Bloomberg. The quotes produced a so-called crossed market, where sellers appear to be asking less than buyers are willing to pay.

Other markets continued trading, usually with a difference of a few cents between their best bid and lowest offer. Nasdaq’s quotes were marked as manual and not electronically accessible, which allowed brokers and other exchanges to ignore the venue’s prices. Its offer price later dropped to $38.01 and remained at that level, almost $4 below the highest bid, until 1:49 p.m., according to data compiled by Bloomberg.

“Clearly investors would hit the ‘don’t like’ button,” Matt McCormick, who helps oversee $6.2 billion at Bahl & Gaynor Inc. in Cincinnati, said in a telephone interview.

The IPO price valued the company at 107 times trailing 12- month earnings, more than all Standard & Poor’s 500 Index stocks except Amazon.com Inc. and Equity Residential. The valuation also made Facebook, co-founded in 2004 by a then-teenage Mark Zuckerberg, the largest company to go public in the U.S.

Customers of London-based Fidessa Group Plc, which helps asset managers track transactions, weren’t receiving confirmation of Facebook trades, according to an e-mailed statement. Michael Cianfrocca, a spokesman for Charles Schwab Corp. in San Francisco, wrote in an e-mail: “There are currently industrywide delays in reporting trade executions. These issues do not appear to be unique to Schwab.”

TD Ameritrade

Uncertainty about whether orders received executions in the opening auction affected some clients of online broker TD Ameritrade Holding Corp., according to Steve Quirk, senior vice president of the trader group at the Omaha, Nebraska-based company. Facebook accounted for 22 percent of equities volume at the firm, he said by e-mail.

Nasdaq shares climbed 3.6 percent to $22.78 today after losing as much as 4.4 percent, the most since October, to $21.99 on May 18. NYSE Euronext (NYX) rose 2.6 percent to $25.26 today.

A total of 582.5 million Facebook shares traded on May 18, or about 6.6 percent of total volume on U.S. exchanges, according to data compiled by Bloomberg.

“I don’t think you’ll see a long-term downturn of volume on Nasdaq,” Karsh said. “Nasdaq will pick up a couple percentage points because it’s the primary listing venue for Facebook.”

To contact the reporter on this story: Nina Mehta in New York at nmehta24@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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Facebook Tumbles Below IPO Price on Second Day of Trading

By Brian Womack and Amy Thomson - May 22, 2012 3:04 AM GMT+0700

Facebook Inc. (FB), the social networking site that raised $16 billion in an initial public offering, fell below its $38 offer price in its second trading day.

The shares dropped 11 percent to $34.03 at the close in New York. The stock rose less than a percent to $38.23 at the close of its first day of trading on May 18.

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Sales at Facebook, which makes most of its money from graphically based online ads, came in at $3.71 billion last year. Photographer: Justin Sullivan/Getty Images

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May 21 (Bloomberg) -- Darren Chervitz, research director for Jacob Funds, talks about Facebook Inc.'s stock price performance and the outlook for the social network firm. Facebook, the social networking site that raised $16 billion in an initial public offering, fell below its $38 offer price in its second trading day. Chervitz speaks with Trish Regan on Bloomberg Television's "InBusiness." (Source: Bloomberg)

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May 21 (Bloomberg) -- Bloomberg’s Jon Erlichman reports on the effect Facebook’s IPO is having on other technology companies. He speaks on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

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May 21 (Bloomberg) -- Tom Forte, an Internet analyst for Telsey Advisory Group, talks about the stock performance of Facebook Inc. in comparison to Google Inc. and LinkedIn Corp. Forte speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)

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May 18 (Bloomberg) -- Mark Zuckerberg, co-founder and chief executive officer of Facebook Inc., David Kirkpatrick, author of "The Facebook Effect," and Brian Wieser, an analyst at Pivotal Research Group LLC, offer their views on Facebook's trading debut and the outlook for the social-networking site. This report also contains comments from Robert McCooey, senior vice president of new listings and capital markets at Nasdaq OMX Group Inc.; Scott Rostan, chief executive officer of Training the Street; John Chachas, managing partner at Methuselah Capital Advisors LP, and Nick Thompson, a senior editor at New Yorker magazine and a Bloomberg contributing editor. (Source: Bloomberg)

Facebook, with more than 900 million users, is trying to attract more marketers to boost sales as competition increases. The company, the biggest provider of online display ads in the U.S., is set to lose the top spot to Google Inc. (GOOG) next year, according to EMarketer Inc. The offering valued Facebook at 107 times trailing 12-month earnings, more than every S&P 500 member except Amazon.com Inc. and Equity Residential. (EQR) Today’s slump reinforces concern that the IPO was priced too high.

“Investors are clearly recognizing the risks embedded in the stock,” said Brian Wieser, an analyst at Pivotal Research Group LLC, who has a sell rating on the stock and doesn’t own it. “It’s just been priced for perfection at the IPO price, and that’s clearly unrealistic.”

Morgan Stanley (MS), the bank that handled the IPO, stepped in to prop up the stock to keep shares from dipping below the offer price on May 18, said people with knowledge of the matter, who asked not to be identified because the purchases were private.

Shareholders ‘Want Out’

“It looks like they’re through spending their own money to support the price,” Francis Gaskins, president of researcher IPOdesktop.com in Marina del Rey, California, said in an interview today. “Shareholders are lined up at the gate --they want out.”

The IPO also suffered from trading glitches on its first day. Nasdaq OMX Group Inc. (NDAQ) Chief Executive Officer Robert Greifeld said a “poor design” in software driving auctions for IPOs caused issues with Facebook’s first trading day.

Morgan Stanley completed its role in the IPO auction at 11:11 a.m. on May 18, Greifeld said last week. Between then and 11:30 a.m., customers kept submitting cancellations and updating existing orders, putting Nasdaq’s systems into a “loop” and preventing it from opening the stock, he said.

The IPO valued the Menlo Park, California-based company site at $104 billion.

Mobile Users

Facebook is trying to adapt as more users visit its site through mobile phones instead of the Web. That put pressure on company executives to articulate their mobile strategy as they marketed the stock to potential investors ahead of the IPO. Facebook has said it would add mobile advertising along with new ads to reach users when they log off the company’s website.

Facebook still faces hurdles in traditional Web advertising. General Motors Co. (GM), the world’s biggest automaker by vehicles sold, said last week it was halting display ads on Facebook, while maintaining brand-promotion pages.

Sales at Facebook, which makes most of its money from graphically based online ads, came in at $3.71 billion last year. That puts it below the top 50 U.S. technology companies by revenue. Google Inc., valued at almost twice as much as Facebook, reported $37.9 billion in revenue last year. Google jumped 18 percent on its first day of trading in 2004.

Internet IPOs

Facebook was the 11th U.S. consumer Internet company to go public in the past year, a stretch that began with LinkedIn (LNKD) Corp. With a valuation of $104.8 billion at the May 18 close, Facebook is worth more than three times the other 10 combined. LinkedIn, a social network for professionals, is second, valued at $10.3 billion.

“There are only so many people that are going to buy into a hyper-growth story,” said Michael Pachter, an analyst with Wedbush Securities Inc. in Los Angeles, who rates the stock outperform and doesn’t own it.

LinkedIn surged 109 percent last May after its IPO. Groupon Inc. (GRPN), the biggest daily-deal coupon site, began trading on Nov. 4 at $20 and rose 31 percent that day. Groupon’s shares closed at $11.58 on May 18.

To contact the reporters on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net; Amy Thomson in London at athomson6@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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S&P 500 Has Biggest Gain in Two Months on China Signals

By Rita Nazareth - May 22, 2012 3:39 AM GMT+0700

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Traders at the New York Stock Exchange. Photographer: Richard Drew/AP Photo

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May 21 (Bloomberg) -- Bloomberg's Deborah Kostroun reports on the performance of the U.S. equity market today. U.S. stocks rose, giving the Standard & Poor’s 500 Index its biggest rally in more than two months, after China signaled it would support growth while German and French officials said they will work to keep Greece in the euro. (Source: Bloomberg)

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May 21 (Bloomberg) -- Marc Faber, the publisher of the Gloom, Boom & Doom report, talks about global stock markets and his investment strategy. Faber also discusses China's economy and Greece's potential exit from the euro area. He speaks with Susan Li on Bloomberg Television's "Asia Edge." (Source: Bloomberg)

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May 22 (Bloomberg) -- Scott Wren, senior equity strategist at Wells Fargo Advisors LLC, talks about the U.S. stock market outlook and the prospects for Federal Reserve monetary policy. Wren, speaking with Susan Li on Bloomberg Television's "First Up," also discusses the European sovereign-debt crisis. (Source: Bloomberg)

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May 21 (Bloomberg) -- Scott Clemons, chief investment strategist at Brown Brothers Harriman & Co., talks about the outlook for U.S. markets and economy. Clemons also talks about Facebook Inc.'s initial public offering. He speaks with Erik Schatzker, Sara Eisen and Stephanie Ruhle on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

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May 21 (Bloomberg) -- Bloomberg's Dominic Chu reports futures are rising while U.S. Treasury yields are ticking up and the Euro-Dollar drifts lower. He speaks on Bloomberg Television's "Inside Track." (Source: Bloomberg)

U.S. stocks rose, giving the Standard & Poor’s 500 Index its biggest rally in more than two months, after China signaled it would support growth while German and French officials said they will work to keep Greece in the euro.

Commodity, technology and industrial shares gained the most among 10 S&P 500 groups. Apple Inc., Newmont Mining Corp. (NEM) and Boeing (BA) Co. added at least 3.8 percent. Cooper Industries Plc (CBE) surged 25 percent as Eaton Corp. (ETN) agreed to buy the company for $11.8 billion. Facebook Inc. tumbled 11 percent and closed below its offer price of $38 in its second trading day. JPMorgan (JPM) Chase & Co. and Bank of America Corp. (BAC) slumped more than 2.7 percent.

The S&P 500 added 1.6 percent to 1,315.99 at 4 p.m. New York time, halting a six-day drop. The Dow Jones Industrial Average rose 135.10 points, or 1.1 percent, to 12,504.48. The Nasdaq Composite Index gained 2.5 percent, the most this year, to 2,847.21. About 6.9 billion shares changed hands on U.S. exchanges or almost in line with the three-month average.

“We’re in need of some rally after the pullback,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc., which manages $4.5 billion in Raleigh, North Carolina. “China’s comments were encouraging as it stands ready to provide stimulus. That’s important for the global economy.”

Stocks rebounded from a four-month low as Chinese Premier Wen Jiabao pledged to focus more on bolstering growth. Germany and France agree that they will do “everything necessary” to ensure Greece remains in Europe’s single currency, Finance Minister Wolfgang Schaeuble said after a meeting with French Finance Minister Pierre Moscovici.

$1 Trillion

More than $1 trillion was erased from U.S. market values this month on concern about Europe’s crisis. The decline took the S&P 500 down as much as 8.7 percent from an almost four-year high. At the end of last week, the S&P 500 traded at 13.1 times reported earnings, below the average since 1954 (SPX) of 16.4.

Today’s rebound in equities extended this year’s gain in the S&P 500 to 4.6 percent. The Morgan Stanley Cyclical Index of companies most-tied to the economy rose 2.5 percent. Apple, the most valuable company, added 5.8 percent to $561.28. Newmont Mining climbed 3.9 percent to $47.37. Boeing jumped 3.8 percent to $71.78 after Argus Research recommended buying the shares of the biggest aerospace company.

Cooper Industries jumped 25 percent, the most in almost 11 years, to $69.88. Each Cooper share will be exchanged for $39.15 in cash and 0.77479 Eaton share. That offer is valued at $72 a share based on Eaton’s May 18 closing price, 29 percent more than Cooper’s price that day.

Yahoo Gains

Yahoo! Inc. (YHOO) advanced 1 percent to $15.58. Alibaba Group Holding Ltd., China’s largest e-commerce provider, agreed to repurchase about a 20 percent stake in itself from the U.S. Web portal for about $7.1 billion.

Radian Group Inc. (RDN) led a rally of mortgage insurers after investor Clinton Group Inc. pushed for a sale of the company. Clinton “is aware of one former industry executive who has expressed serious interest in acquiring Radian at a price significantly above its current trading level,” the asset management firm said today in a statement.

The Philadelphia-based insurer jumped 18 percent to $2.39. MGIC Investment Corp. (MTG) climbed 6.3 percent to $2.36. Genworth Financial Inc. (GNW) advanced 4.5 percent to $5.10.

Facebook tumbled 11 percent to $34.03. It rose 0.6 percent in its first day of trading on May 18. The offering valued Facebook at 107 times trailing 12-month earnings, more than every S&P 500 member except Amazon.com Inc. and Equity Residential. Facebook is trying to attract more marketers to boost sales as competition increases. General Motors Co. last week announced plans to cut Facebook advertising.

‘Valuation Is Rich’

“Valuation is rich,” said Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion. “You have a company like GM saying they don’t see the utility in advertising on Facebook. That collection of things has influenced the lack of enthusiasm.”

Zynga Inc., which makes games played on Facebook, lost 1 percent to $7.09. The shares tumbled 13 percent on May 18. LinkedIn Corp. (LNKD), the professional-networking site, dropped 2.2 percent to $96.84.

Nasdaq OMX Group Inc. (NDAQ), under scrutiny after shares of Facebook were plagued by delays and mishandled orders on its first day of trading, said it will no longer accept modifications to orders during the final stages of initial public offering auctions, according to a statement.

Nasdaq’s chief executive officer said yesterday that Facebook Inc. (FB)’s stock trading following its IPO was delayed May 18 because computer systems used to establish the opening price were overwhelmed by order cancellations and updates.

‘Highly Unattractive’

A gauge of diversified financial shares in the S&P 500 retreated. David Trone, an analyst at JMP Securities LLC, downgraded some banks including JPMorgan and Bank of America. He said risk/reward is “highly unattractive.” JPMorgan fell 2.9 percent to $32.51. Bank of America slumped 2.7 percent to $6.83.

JPMorgan suspended its daily stock repurchase program because the bank needs the money to meet international capital rules, not because of trading losses, Chief Executive Officer Jamie Dimon said. JPMorgan revealed a $2 billion trading loss on May 10. The firm may face even bigger losses on faulty bets in credit markets if Europe’s crisis worsens, according to one of the hedge funds that took the other side of the trades.

“They’re not out of those positions,” Michael Platt, co- founder and chief executive officer of BlueCrest Capital Management LLP, said today in an interview on Bloomberg Television’s “Inside Track.”

BlackRock, Lowe’s

BlackRock Inc. (BLK) retreated 2.4 percent to $167.73. Barclays Plc, the U.K.’s second-largest bank by assets, will sell its entire $6.1 billion stake in BlackRock before the latest round of Basel rules stops it from counting the holding as capital.

Lowe’s Cos. (LOW) slumped 10 percent, the most since 2009, to $25.60. The second-largest U.S. home-improvement retailer reduced its forecast for full-year earnings to a range of $1.73 to $1.83 from $1.75 to $1.85 because of a smaller increase in profit margins than it had previously expected.

Campbell Soup Co. (CPB) fell 2 percent to $32.75 after posting a decline in third-quarter profit as the company works to revive its struggling soup business.

Eastman Kodak Co. (EKDKQ) lost a ruling in a legal fight against Apple (AAPL) Inc. and Research In Motion Ltd. (RIM) over a patent for digital image-preview technology, a decision that may hurt the value of assets Kodak is selling. The shares, which have traded over the counter since the bankruptcy, plunged 27 percent to 20 cents.

Avon Products Inc. (AVP) retreated 1.1 percent to $16.77. The world’s largest door-to-door cosmetics seller was downgraded to sell from neutral at UBS AG.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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