UPI NewsTrack Business

• Tweet

U.S. markets close in red Wednesday

NEW YORK, May 30 (UPI) -- U.S. markets closed sharply lower Wednesday, following losses in Asia and Europe.

The European Commission issued a report that spelled out the continent's fiscal troubles country by country. There was little new in the report, but investors took heed of a renewed call for Spain to recapitalize banks. The report also made recommendations for relatively strong countries, such as Germany and France, warning of a "spillover" effect from weaker economies.

By close of trading on Wall Street, the Dow Jones industrial average gave up 160.83 points, or 1.28 percent, to 12,419.86. The Standard & Poor's 500 shed 19.10 points, or 1.43 percent, to 1,313.32. The Nasdaq Composite dropped 33.63 points, 1.17 percent to 2,837.36.

On the New York Stock Exchange, 424 stocks advanced and 2,640 declined on a volume of 3.3 billion shares traded.

The benchmark 10-year treasury note rose 1 6/32 to yield 1.621 percent.

The euro fell to $1.237 from Tuesday's $1.2503. Against the yen, the dollar hit 79.07 from 79.50 yen.

In Tokyo, the Nikkei 225 index dropped 0.28 percent, 23.89 points, to 8,633.76.

In London, the FTSE 100 index lost 1.74 percent, 93.86, to 5,297.28.

IAM workers vote to stay on strike

JOLIET, Ill., May 30 (UPI) -- Union leaders at a Caterpillar Inc. plant in Illinois said 81 percent of striking workers rejected a contract little changed from a previously turned-down deal.

Ninety-four percent of union members voted to reject an offer made in late April. About 800 members of the union local went on strike May 1.

In the second six-year offer, pay and benefits were unchanged, The Wall Street Journal reported Wednesday.

Caterpillar is also seeking to adjust wages for those hired after May 2005 and to freeze wages for those hired before that date.

The latest contract offer, turned down Wednesday by members of the International Association of Machinists and Aerospace Workers, demanded a larger health insurance contribution from workers. It would also shift the workers' current pension plan to a standard 401k retirement savings plan, the Journal said.

Workers were offered $1,000 as a bonus for ratifying the contract and bonus pay of up to $2,100 if the factory hit various performance targets in the second quarter.

Union leaders advised members to turn down the contract, which they said offered too few changes from the first offer. They also said the goals set for the performance bonus were unrealistically high.

IAM official Steve Jones said Caterpillar has apparently decided to stop negotiations, at least temporarily.

After the vote, Jones said, union leaders told the company they were ready to continue talks, but the company said there was no point in doing so.

Gorman stands by Facebook's IPO

NEW YORK, May 30 (UPI) -- Morgan Stanley Chairman and Chief Executive Officer James Gorman said the U.S. bank followed the rules during Facebook's initial public stock offering.

Gorman said in a webcast message to Morgan Stanley employees "speculation of nefarious activity" concerning Facebook's debut as a public company was not true, The Wall Street Journal reported Wednesday.

Gorman also said Morgan Stanley operated "100 percent within the rules" and that he was not "aware of any dissent" among other firms that underwrote Facebook's IPO.

He also said the sharp decline in Facebook's share value since May 18 was "disappointing."

Dealogic, which monitors market data, said Facebook's fall from a $38 per share opening price to $28.84 Tuesday, a 24 percent drop, was among the most precipitous in history for a large company.

The company was valued at $104 billion after its first day of trading and has since tumbled to a company worth $79 billion. Chief Executive Officer Mark Zuckerberg's share of the company has fallen from $19.1 billion to about $14.5 billion, the Journal said.

During its IPO, trading Facebook shares was delayed for 30 minutes, and after that traders had difficulty confirming transactions.

"It's pretty stunning to watch. I haven't seen a turnaround in sentiment this severe in 15 years, and certainly not for an IPO," said Keith Bliss, a New York Stock Exchange floor trader and senior vice president at Cuttone & Co.

The social network's debut was one of the largest in U.S. corporate history, but Facebook set a record with its options trading, which opened Tuesday with 365,000 contracts changing hands, Trade Alert reported.

The bets were largely bearish, with many investors forecasting Facebook shares would drop to $25 per share by mid-July, the newspaper said.

EC pushes for region-wide bank union

BRUSSELS, May 30 (UPI) -- The European Commission on Wednesday proposed creation of a common backstop for banking problems, including joint protection of deposits.

In calling for a region-wide "banking union," EC President Jose Manuel Barroso said, "For full confidence in the future of the euro area, it is important that member states agree to launch a process toward more integration -- financial and economic."

He said conditions in the Spanish banking sector had heightened the need for further international cooperation, The New York Times reported.

The Wall Street Journal said the EC would also push for creation of region-wide euro bonds.

The commission also issued a comprehensive review of the European Union's finances, country by country, and said 12 member states out of 27 warranted further economic reviews.

The commission warned Belgium, Bulgaria, Cyprus, Denmark, Finland, France, Italy, Hungary, Slovenia, Spain, Sweden and Britain that their fiscal positions were out of balance.

Spain and Cyprus were noted as having "very serious imbalances," while France, Italy, Hungary and Slovenia were tagged as having "serious imbalances."

Problems in Belgium, Bulgaria, Denmark, Finland, Sweden and Britain were seen as milder, but the commission noted Greece, Portugal, Ireland and Romania were "already under enhanced economic surveillance."