Halftime Report 5.30.2012

Leading the stock declines were U.S. companies with significant exposure to global growth.

Energy stocks led the fall as crude oil tumbled more than 2.5%, while heavy-machine giant Caterpillar CAT -2.64% and aluminum maker Alcoa AA -3.26% led the Dow decliners. Defensive stocks in utilities, telecommunications and consumer staples fared relatively better.

The fall is volatile stocks came as Spain’s banks saw an erosion in deposits, further intensifying the currency crisis in Spain and throughout Europe. Retail and corporate deposits in Spanish banks fell €31.44 billion ($39.31 billion) to €1.624 trillion, their lowest since the euro-zone debt crisis began, according to data published by the European Central Bank. In response to the deposit loss, the Spanish 10-year bond shot higher, to 6.641%, the highest level since November 2011.

The Stoxx Europe 600 index fell -1.3% and France’s CAC-40 lost -1.8%. In Spain, the IBEX 35 declined -1.5%. The euro, meantime, plunged to $1.2421, its lowest level since the summer of 2010 and down from $1.2503 late Tuesday in New York. The European concerns sent demand for U.S. Treasurys higher, pushing the yield on the benchmark 10-year note down to a record low of 1.6459%. The yield on Germany’s two-year bond, another haven, fell to 0.018%.

In economic news, the pending home sales data come out this morning with worse than expected results. In the report, pending home sales for April decreased by -5.5% on a month by month basis.

Research in Motion Ltd. (RIMM) slid -7.39% after it was announced that they expected to report an operating loss for the current economic quarter. RIM, manufacturer of blackberry smartphones, faces major competition from Apple’s iPhone and the Android market and is having sales problems. Apple (AAPL) -0.34% slipped after CEO Tim Cook expressed Apple’s interest in TV with their iTV or unknown, currently developing products, and said the company wants to move the majority of their manufacturing stateside. Pep Boys (PBY) plunged -21.89% after the auto parts retailer terminated an agreement to be taken private by Gores Group. Finally, FormFactor (FORM) climbed 6.43% after the semiconductor-equipment maker raised its second-quarter revenue outlook, citing strong demand of Dynamic Random-Access Memory and Flash memory.

Thomas Doherty is a student at Villanova University majoring in Finance and Economics. All questions and comments can be sent to Thomas@KeeneOnTheMarket.com

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