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Well, it was fun while it lasted. The Dow Jones (INDEX: ^DJI ) recovered from having its worst week of the year last week by rebounding 1.09% yesterday. The Nasdaq (INDEX: ^IXIC ) saw a steep 2.46% gain.
Today, the Dow was down a scant 0.01% -- otherwise known as zilch, or nada -- while the Nasdaq fell back 0.29%. Both spent most of the day with reasonable gains but ran out of steam at the end of the day.
Greece 2: The coming big-budget disaster
Early scapegoats for the late-day fall center around Greece, the convenient whipping boy of the financial press. I can see the newsroom right now: "Dow drops 0.5% late day? Quick, get out the canned Greece story!"
In a story from last week I detailed why Greece -- a country with a GDP roughly equivalent to the state of Colorado -- is imperiling the world economy. It's not that Greece itself is so relevant, but rather the potential that it leaving portends future problems in larger eurozone economies such as Spain (and possibly even Italy). The unfortunate reality is that Greece is just the most visible of the challenged economies in Europe. This storyline will play out over several years, so buckle in.
Big banks on the rebound
More concerns around Europe weren't enough to spook banking investors. JPMorgan Chase led the Dow stocks with a 4.61% gain. Bank of America (NYSE: BAC ) rode shotgun in the winner's circle, seeing its shares bounce back 2.2%. Of course, it's a bit early for any banking investors to be doing a victory lap; Bank of America is still 41% off its 52-week high and JPMorgan is down 20.4% in just the last month alone.
The news buoying the sector today was a rise in existing U.S. home sales. Also encouraging was that more sold homes are owner-occupied, rather than opportunist buys scooping up distressed housing. All in all, the U.S. housing market still has a ways to go, but stability is a big step in the banking industry.
Finally, we get a look at the busted IPO that's captured investors' attention: Facebook (Nasdaq: FB ) . The social networking giant fell 8.9% today, as negative press continued to surround the way the company's IPO was handled. Facebook is becoming a black eye for lead underwriter Morgan Stanley as well as fellow underwriters Goldman Sachs and JPMorgan. The companies not only collected fees significantly below normal rates to bring Facebook public, but also had to support the stock on its first trading day. Not only that, but the SEC is looking into the three underwriters cutting their estimates for Facebook during their roadshow to promote the stock. That information wasn't widely available previously.
Once the dust settles, the tens of millions in fees earned by these investment banks could turn into hundreds of millions in losses if Facebook keeps falling. Not a good result for an industry that's already facing a challenging May.
As far as Facebook, the damage from its IPO looks pretty well contained to the company. LinkedIn (NYSE: LNKD ) saw its own shares soar 4.64% today. There was little news around the company, and could be social media investors fleeing back to a company with a higher growth rates.
A better idea than Facebook
If you're sitting dumbfounded watching the Facebook IPO unravel -- as I am -- make sure to check out our free report: "Forget Facebook -- Here's the Tech IPO You Should Be Buying." The free report details a company leaving Facebook in the dust. It's a brand-new report hot off the digital presses, but won't be here forever, so grab a copy today!