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Pre-Market: Facebook Makes Second Offering of 70 Million Shares; Jobless Claims Spike
After yesterday's Fed-induced sugar rush, markets are heading
slightly lower this morning as jobless claims in the US
Yesterday, the Federal Reserve signaled confidence in the economy's strength, but scaled back stimulus by a small amount. The central bank will buy $75 billion in bonds and mortgage-backed securities every month, $10 billion less than it had every month since September 2012. It also signaled that interest rates will stay very low for the foreseeable future, as long as the unemployment rate remains over 6.5%. The market surged on the news, with the Dow Jones Industrial Average (INDEXDJX:.DJI) gaining 292.97 points to hit a record high of 16,167.97.
Overseas markets are still surging in reaction to the Fed decision, but US stock index futures are indicating a slightly lower opening. Dow futures were down 0.06% at 16,100.00 before the opening bell on Monday while S&P 500 (INDEXSP:.INX) futures fell 0.09% to 1,803.00. Nasdaq (INDEXNASDAQ:.IXIC) futures slipped 0.23% to 3,500.50.
The bond market sold off. The 10-year Treasury yield rose two basis point to 2.91% now that the Fed will buy fewer bonds every month. Gold prices are also down. Spot gold fell 2.5% to $1,203.80.
Initial claims for unemployment insurance spiked for a second straight week. Last week, 379,000 people filed for unemployment, up by 10,000 from the week before. Economists had expected claims to fall to 337,000. Later today, the government will report November existing home sales. The annualized rate of sales is expected to fall to 5.02 million from 5.12 million.
Facebook ( FB ) shares fell 2.25% today after the company announced a second offering. The social network will offer 70 million shares in the offering. CEO Mark Zuckerberg will slightly reduce his voting power by selling Class A shares, selling $2.3 billion worth of the stock, but he will gain 60 million Class B shares, which will have 10 times the votes. The CEO's earnings from the sale will mostly go to the taxes incurred by exercising the option to buy the Class B shares, but he will also donate $1 billion to a charity. Zuckerberg will still control 62.8% of the company's voting power, down from 65%. The company itself will sell 23 million shares.
Oracle ( ORCL ) earnings for the second fiscal quarter were better than expected. The database software giant reported that earnings per share came in at $0.69 as revenue rose 2% to $9.3 billion, quelling worries that companies are scaling back on IT spending. Shares were up 2% at the time of writing.
Reuters reported that Dish ( DISH ) is likely to make a bid for T-Mobile US ( TMUS ). The satellite TV provider's attempt to acquire Sprint ( S ) failed, but Dish is eager to use its valuable rights to the 4G wireless spectrum.