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Wall Street bounces back; Zynga cuts staff

Monday, June 03, 2013 - 02:19

June 3 - Summary of business headlines: Market recovers some of Friday's sell-off as data suggest Fed has economic cover to keep buying; Zynga to slash jobs in bid to save up to $80 million per year; Merck drug shows early promise, stock gains. Conway G. Gittens reports.

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The week starts with choppiness as investors try to figure out if what's bad is good or is bad - just bad. By the end of the day, stocks rallied to their best levels of the day - as investors bet confusing data mean the Federal Reserve will stay the course. Case in point: Manufacturing activity shrank for the first time in six months, according to the May report from the Institute for Supply Management. On the bright side: May auto sales, rising eight percent from a year ago, according to Autodata Corp. May's figures topped forecasts and were boosted by strong demand for pick-up trucks; a nod to the improving housing market. Stock market volatility aside - Sallie Krawcheck, former head of global wealth management at Bank of America Merril Lynch, says investor complacency with low interest rates is more worrisome. SOUNDBITE: SALLIE KRAWCHECK, FORMER HEAD OF GLOBAL WEALTH MANAGEMENT, BANK OF AMERICA MERRIL LYNCH (ENGLISH) SAYING: "Gee it's a bond, right, I get my money back at maturity.' But there can be capital losses in bond funds. When interest rates go up, the price of the bonds go down and the bond fund can suffer. And the other thing I hear, which worries me is 'it must be safe, the rates are so low.' But this is one when you can have losses; in where people talk about risk-free return, this I think is return-free risk." Speaking of risk of a different kind - Zynga is handing out pick slips. The once-hot mobile gaming company behind Farmville is slashing its workforce by a fifth or 520 jobs. Zynga looks to save up to $80 million a year but that wasn't enough - the stock slumped 12 percent. Positive news on the cancer front. A Merck drug aimed at boosting the immune system and shrinking tumors showing promise in early clinical trials. Shares of Merck jumped nearly four percent and were a major factor in the Dow's rebound. Apple may finally be making progress in a long-expected streaming music service, signing up Warner Music Group, according to the New York Times and the Wall Street Journal. Apple did not respond for comment. Shares of music streaming service Pandora reacted immediately - dropping 10.6 percent by the end of the day. On to Europe: investors are worried slower economic growth in the U.S. and China will hurt home-grown businesses, resulting in a market slide.

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Wall Street bounces back; Zynga cuts staff

Monday, June 03, 2013 - 02:19