US stocks finished lower on Thursday, capping off the worst month in two years for the Nasdaq and Dow Jones indexes. Thursday's declines were sparked by several disappointing reports on the US economy, including readings on initial jobless claims, GDP growth in the first quarter, and manufacturing. At the same time, investors were still keeping a close eye on Europe, where the escalating debt crisis is renewing economists' concerns that the global economy may be headed for another recession.
For Americans who long for the chance to get their hands on an iPhone without signing the two-year contracts that the big boys require, the wait is just about over. In a joint announcement released Thursday, Apple and regional wireless carrier Cricket announced that an agreement has been reached for Cricket to begin selling the world's first iPhone on a prepaid service basis beginning June 22nd. Of course, customers looking to get in on the prepaid option will have to pay full price for their iPhones, as the hefty subsidies the other carriers pitch in are incentives for contract agreements. No contract, no subsidy, with the new prepaid option from Cricket.
The impacts of Facebook's disappointing initial public offering several weeks ago are well documented. Investors have taken a bath in the IPO, as shares were priced at $38, rising just above that mark on day one but have been declining steadily ever since, dropping below $27 a share at one point in Thursday's session. The debacle has taken a huge toll on the wealth of Facebook executives, with CEO and co-founder Mark Zuckerberg losing nearly $10 billion from his wealth on paper, and investigations have been launched or threatened against the IPO's underwriters for their valuation of the shares.
A report from the Boston Consulting Group on Thursday showed that the financial strains on American consumers since the recession have not been limited to the lower and middle classes, as the number of millionaires declined last year for the first time since the nation's worst downturn since the Great Depression ended. According to the group's Global Wealth Study, issued Thursday, the number of households in the US with liquid assets of at least $1 million fell to 5.134 million last year from 5.263 million in 2010. At the same time, the total value of private wealth among Americans fell nearly 1 percent to $38 trillion.
Wall Street banking giant Morgan Stanley on Thursday informed Citigroup that it will indeed exercise an option available to it to increase its stake in Morgan Stanley Smith Barney. The move will eventually increase Morgan Stanley's stake in the Smith Barney unit from 51 percent, where it stands now, to 65 percent. Morgan Stanley values Smith Barney as a whole at between $13 billion and $16 billion, while Citigroup analysts think the brokerage is worth closer to $20 billion. As a result of the disagreement on valuation, a third party will be brought in to determine fair market value for the stake before it changes hands.
Japanese camera making giant Olympus Corp announced Thursday it will lay off at least 2,500 workers and sell a stake to either Sony or Panasonic to improve its financial condition in the wake of a $1.7 billion fraud scandal that rocked the company last year. Currently the world's leading manufacturer of diagnostic endoscopes, the company was forced to restate years of earnings, leaving its balance sheet dangerously low on capital reserves. The scandal was uncovered by Olympus CEO Michael Woodford, who has since left the company.
The US Labor Department reported Thursday that initial jobless claims rose to a five week high last week, prompting a handful of economists to apply downward revisions to their estimates for May job growth. The agency reported a seasonally adjusted total of 383,000 for the week ended May 25th, up 10,000 from the week prior. The four-week moving average, meanwhile, which is tallied to smooth over volatile swings sometimes seen in the weekly data, rose for the first time in four weeks to 374,500.
Cyber security officials in Iran announced on Wednesday that a new, extremely complex virus had been discovered lurking in government computers. Dubbed “Flame,” the virus is more complex and more powerful than any virus that's ever been found, say security experts that have had a chance to investigate Flame. In a post on its official website, the Iranian National Computer Emergency Response Team, or CERT, said it had discovered the virus after several investigations conducted over the last two months.
US stocks were hammered Wednesday as all three major indexes fell well over 1 percent. Investors were shaken by the European Union's denial of assistance with a bailout package for Spain's fourth-largest bank, raising additional doubts about Spain's ability to fund as much as $100 billion in rescues of Spanish banks. Investors flocked to Treasuries throughout the day, pushing the yield on the ten-year note down to 1.62 percent, the benchmark bond's lowest yield in history. Facebook shares slipped again on Wednesday, resulting in a slide in CEO Mark Zuckerberg's net worth that dropped him from Bloomberg's list of the world's 40 wealthiest billionaires.
In the latest sign that the US housing market is making some ground in recovery, home prices rose in the majority of the nation's twenty largest cities in March, according to the Standard & Poor's / Case-Shiller index issued this week. The report indicated that prices rose in 12 of the 20 cities the index tracks from February to March, including Tampa and Miami, which have been two of the hardest hit communities by falling values over the last few years. The biggest gains, the index showed, took place in Dallas, Phoenix, and Seattle.