Just over one month after the Dow Jones Industrial Average hit the year's high on April 26, it closed May with the worst decline since 1940, reports the Wall Street Journal. The Dow is "in negative territory for the week, the month and the year." May started poorly with the "Flash Crash" that saw a 1,000-point slide less than one week into the month. The month dropped a total of 871.98 points. Friday's sudden drop of 122.36 points came after noon when the Fitch ratings firm downgraded Spain, which was just the most recent crisis in Europe.
Spain was downgraded from an AAA to an AA+ by the Fitch ratings firm, which then caused the indexes to decline, reports the New York Times. Part of the reason for the downgrade, was because Fitch "thought the Spanish government could find it difficult to carry out some of the cuts." Other contributing factors that led to Spain's downgrade are its unemployment rate and high level of debt. Fitch's announcement reflected concerns investors have had for a while. While the European crisis started with Greece, some have been concerned problems would spread to other European countries and possibly "spill over into the United States economy." Not only did Fitch's downgrade affect the Dow, but it also pushed the euro lower to $1.2287 from $1.2378 just the day before.
Europe and other countries had some good news apart from the market with the arrival of the iPad, according to the Wall Street Journal. Apple's (AAPL) iPad initially launched in the U.S. on April 3, and it finally went on sale in Australia, Canada, France, Germany, Italy, Japan, Spain, Switzerland and the U.K. after its launch date was pushed back a month. Apple admitted that the iPad demand in the U.S. was higher than expected, which led to the delayed international release. Now estimates for iPad sales are that 1.7 million in April to June "and five million for the year world-wide." A Munich Apple store had a line of 500, while a store in Japan's Ginza neighborhood "reported 1,200 people lined up to be among the first to get an iPad.
Five more banks were seized on Friday, bringing the yearly total to 78, reports Reuters. Three of the banks were owned by the Bank of Florida Corp. and "had a combined $1.48 billion in assets." U.S. regulators also shut down Sun West Bank in Las Vegas and Granite Community Bank in Granite Bay, California. Last year 140 banks were shut down and closures are expected to exceed that number this year.
Last month Johnson & Johnson (JNJ) had to recall children's medicine and on Friday the company recalled four more made at the same plant, reports the Wall Street Journal. Just a day before the recall, the company had a congressional hearing over how recalls were handled. The newest recall only affects about 100,000 bottles of PediaCare's Multi-Symptom Cold, Long Acting Cough, Decongestant, and Allergy and Cold medicines. The Oversight Committee that held the hearing for last month's recalls "would continue investigating the problems." Right now companies volunteer recalls, but the committee will determine "whether the FDA needs more staff and the power to order a recall."
Chinese workers who normally work 12-hour days, six days a week for low wages are on strike at a Honda (HMC) factory, reports the New York Times. The government, which owns the media outlets, normally wouldn't allow the strike to happen so publically. In fact, Chinese officials and economists agree with the workers that they "deserve higher wages for their role in the country's global export machine." If Chinese workers get better wages, it would help the nation's economic growth.
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