May 22 - Summary of business headlines: S&P 500 rises for second day, but concerns about Europe tempers Wall Street; Existing home sales near two-year high; Facebook stock sinks more as Morgan Stanley controversy grows; Best Buy beats forecasts. Conway G. Gittens reports.
The S&P 500 barely rose for a second day in a row, the first time that's happened all month, as investors turned their attention to the domestic economy. Sales of previously owned homes were up in April, hitting their highest levels in almost two years. Cary Leahey of Decision Economics: SOUNDBITE: CARY LEAHEY, SENIOR MANAGING DIRECTOR/SENIOR ECONOMIST, DECISION ECONOMICS (ENGLISH) SAYING: "This sector, if you look at it from a 30-year perspective, has after a huge run-up and huge run-down has been flat for about three years. Historically, this is a sector that when it takes off it takes off like a rocket, so the fact that it is moving flat is actually good news and bad news. It's good news because it is not falling any further but it's bad news because it is not adding much to the economy." But the market struggled late in the day on lingering concerns about the U.S. and global economy. The Organization for Economic Cooperation and Development expects world economic growth to ease this year with growing threats from the euro zone. And ratings agency Fitch downgraded Japan, citing the nation's rising public debt. Facebook shares closed near the lows of the day. The stock now down 18 percent from its $38 initial public offering price. There's renewed focus on revenues after sources tell Reuters the tech analyst for Morgan Stanley, the lead underwriting bank on the IPO, informed major clients he was lowering sales forecasts just days before the stock went public. Morgan Stanley says its procedures for the Facebook IPO "were in compliance with all applicable regulations." Best Buy beat quarterly forecasts, but analysts warn the company's restructuring, including the search for a CEO, is far from over. Sales at stores opened at least 14 months posted an even bigger drop than they did the same time last year. Back to Wall Street now - modest gains fizzled leaving the market little changed. And European markets posted gains not far from two percent ahead of a key summit of European Union leaders. Conway Gittens, Reuters