In Asia, the Nikkei fell 2% to 8,557. The Hang Seng was off 1.2% to 18,818.

Across Europe, markets opened down well over 1%. The FTSE was down just more than 1% to 5,348. The DAX fell 1% to 6,371.

Douglas A. McIntyre

Last, key data about the US economy has been relatively poor. The number of jobs added per month has dropped well below the 200,000 pace set earlier this year. Housing starts have improved somewhat, but home prices have not. If there will be any stimulus added to the economy by the federal government, it will not be until after the election–which means next year. And, both individuals and companies are uncertain about what their tax status will be. Congress could decide to allow relatively low tax rates which have been in place since Bush, to expire.

Douglas A. McIntyre

The market value is still the largest of any public company at $501 billion, but the market value is now down almost $100 billion from the actual peak.  We have reported on two recent occasions how weak iPhone sales projections from analysts seem to be the big concern.  Both reports indicate that the iPad will save the day, and the latest earnings report showed that China really saved the day (with purchases rather than cheap labor).

The consensus analyst target on Apple is now above $708.00 and that implies another 32% upside if the analysts are right.  Some analyst calls even target $1,000 (and higher) for Apple stock.  At that rate, it becomes cheaper to buy Apple’s products than it does to buy 1 share of Apple stock.

Maybe this is the peak valuation concern coming into play as well.  Microsoft Corporation (NASDAQ: MSFT), which ultimately may have saved Apple with a Gates-led investment, reached up close to the $600 billion or so at the peak in 2000.  Cisco Systems Inc. (NASDAQ: CSCO) also reached about $350 billion.

General Electric Co. (NYSE: GE) peaked somewhere around the $475 billion valuation.  Exxon Mobil Corporation (NYSE: XOM) also peaked out above $500 billion during the energy bubble run-up, but that has not been seen since and the current market value is about $385 billion or so.  The common theme is that all of these values have come crashing down.

There is one thing to consider here in the ’mega-cap valuations and that is that Exxon Mobil is the only stock that had a low valuation like Apple still has.  In fact, Apple now trades at only about 10-times the Fiscal 2013 earnings estimates now that it has pulled back over $100.  Its multiple is even less than that if you back out the $100+ billion treasure trove that the company has.

The focus ahead has to be on Apple TV.  iPad and iPhone sales may only be able to go so far, and now it will be up to the new devices.  One concern we have is that the story of the Mac is a lost one.  Honestly, when was the last time you heard anyone focused on Mac sales in the last few months?  It is all about iPads and iPhones, which are actually cannibalizing what would have been Mac sales, and the talk remains around Apple TV.

One issue to consider is that certain funds have had to lighten up in Apple shares.  The large institutional sales orders have not been very evident in recent months, but the reality is that Apple started to become too heavily weighted for many non-index fund managers.  To prove this in the NASDAQ 100, the PowerShares QQQ (NASDAQ: QQQ) has close to an 18% weighting in Apple.  We have seen one estimate that only about one-third of the share selling was tied to large funds and hedge funds, although that no longer be the case since that data is 45 days old (or longer).

What seems to be at work is simply a change of heart.  The stock was weak ahead of May and the stock was still above $600 as recently as April 27.  Still, the psychology of “Sell in May and go away!” has been exaggerated due to the woes of Europe, the slowing growth of the BRIC nations, and weakening U.S. economic data.

Another concern may be that Microsoft Corporation (NASDAQ: MSFT) is being favorably treated going into the Windows 8 launch later this year.  All of the companies in technology are talking this up.  It is even possible that investors are unloading shares just so they can buy up Facebook shares after the IPO on Friday.

Apple is not expensive at all.  The question is whether or not it can be maintained.  When you are paying 10-times for future earnings today, that implies that you are paying for earnings out about ten years on a static basis.  All that is happening after the massive run that has been seen over the last decade is that the growth rate cannot be maintained indefinitely.

This sentiment won’t last forever, but the focus is elsewhere for the time being.  Will Apple hit $500 or even lower?  Maybe.  As long as the market does not really tank and as long as we do not enter a second recession, the consensus is that Apple’s stock still has a lot of room to rise after the dust settles.

JON C. OGG

Of those who have ever had debt, only 20% say they have more debt than they did a year ago, while 32% say they have less and 47% say debt levels are about equal. Paying back debt is difficult or worse for 49% of business owners, and one in five business owners say they are unable to get the loans they need, while 39% say they do have access to needed credit and 38% say they don’t need credit. Among those who say they did not have enough credit, about 75% said that the lack of credit was hurting their businesses.

The inability of 20% of businesses to get credit is the most interesting point in this survey. Here’s Gallup’s take:

It is unclear whether weak business conditions and more stringent underwriting requirements have rightfully reduced the credit available to many of these small businesses, or whether some of today’s underwriting standards remain too difficult — reflecting the fallout of the financial crisis. Regardless, as long as one in five small businesses that have used credit are under such duress, it will be difficult for the U.S. economy to gain substantial positive economic momentum.

That sounds about right.

The Gallup news release is available here.

Paul Ausick

The Hang Seng dropped nearly 3.2% to 19,264. The Nikkei fell 1.1% to 8,801. The Shanghai Composite was down 1.2% to 2,457.

Most markets in Europe opened off at least 1%. Bank shares were hurt particularly on concerns that their sovereign debt holdings may have to be written down in some cases. Gold and oil were both off on belief that the global economy could falter.

While data from the EU yesterday showed that the region was not in recession in the first quarter, this was largely because of an improvement of 0.5% in Germany. Figures for Greece, Spain and Portugal showed contraction, and France was no better than flat in GDP movement over the last month of 2011.

Douglas A. McIntyre

The carnage is particularly severe in a few sectors.

News that JP Morgan (NYSE: JPM) fired its chief investment officer reminded investors of how badly risk is managed at large banks. JPM has taken a $2 billion write-off its London traders took. JPM is down 2.81% to $35.90.Back of America (NYSE: BAC) is down 2% on similar sentiment about risk to $7.39, and Citigroup (NYSE: C) is down 2%. Morgan Stanley (NYSE: MS) is down 3.4%. Its debt will probably be downgraded this summer, according to a number of sources.

Several tech stock were hurt by worry of a slowing economy in Europe, and perhaps Asia. These include Symantac (NASDAQ: SYMC), Micron (NASDAQ: MU), Clearwire (NASDAQ: CLWR), and Nvidia (NASDAQ: NVDA). The sell off in Clearwire is more because of debt than overseas exposure.

Yahoo! (NASDAQ: YHOO) is only up 1.4% on news it sacked and replaced its CEO. Markets probably assume that its trouble goes well beyond a replacement of management. Best Buy (NYSE: BBY) fired its chairman and founder because he helped cover-up a relationship the electronics firm’s CEO has with another employee. Best Buy shares are up less than 1%

Douglas A. McIntyre

The following ten securities will be added to the Index: Cerus Corporation (Nasdaq: CERS), Celldex Therapeutics, Inc. (Nasdaq: CLDX), Amicus Therapeutics, Inc.(Nasdaq: FOLD), Infinity Pharmaceuticals, Inc. (Nasdaq: INFI), Jazz Pharmaceuticals plc (Nasdaq: JAZZ), Omeros Corporation (Nasdaq: OMER), Orexigen Therapeutics, Inc. (Nasdaq: OREX), Pacira Pharmaceuticals, Inc. (Nasdaq: PCRX), Raptor Pharmaceutical Corporation (Nasdaq: RPTP), and Trius Therapeutics, Inc. (Nasdaq: TSRX).

The following members will be booted from the NASDAQ Biotechnology Index: BioSante Pharmaceuticals, Inc. (Nasdaq: BPAX), China Biologic Products, Inc. (Nasdaq: CBPO), Columbia Laboratories, Inc. (Nasdaq: CBRX), Cardiome Pharma Corp (Nasdaq: CRME) and DURECT Corporation (Nasdaq: DRRX).

The NASDAQ Biotechnology Index tracks the performance of a set of NASDAQ-listed securities that are classified as either biotechnology or pharmaceutical and it is re-ranked twice a year (May/November).

The iShares Nasdaq Biotechnology (NASDAQ: IBB) ETF has more than $1.8 billion in assets and it aims to track the NASDAQ Biotechnology Index per its description.  SPDR S&P Biotech (AMEX: XBI) has more than $500 million in assets tracks the biotech members ranked by S&P, but there are some overlaps in the indexes. Market Vectors Biotech ETF (AMEX: BBH) has only just over $100 million in assets and tracks the  Market Vectors US Listed Biotech 25 Index.

JON C. OGG

It may seem impressive on the surface that formal bankruptcy was avoided here.  In reality, the losses for YRC shareholders were so atrocious that the stock issued had two different reverse stock splits.  The sub-$6.00 price of today compares to a reverse split-adjusted share price of 32,540.62 back in September of 2009.  The company’s most recent balance sheet shows that total stockholder equity is negative by -$431.8 million and its net tangible assets are also negative at -$544.9 million.

Here is what the company’s release states:

“YRC Worldwide Named to 2012 FORTUNE 500 List”

YRC Worldwide Inc. (NASDAQ: YRCW) today announced it has been named to the FORTUNE 500 list of the largest U.S.-based companies. YRCW was ranked 487 overall.

Then the company claims over 200,000 customers and a newly optimized network for its largest subsidiary YRC Freight.  FORTUNE’s methodology for the FORTUNE 500 is listed as being companies ranked by total revenues for their respective fiscal years that are incorporated and operate in the U.S. and file financial statements with a government agency.

A look at the balance sheet and income statement shows that the revenues for each of the last three years (2011 first) were $4.868 billion, $4.33 billion, and $4.87 billion.  The losses in each of those years were (2011 first) -$409.31 million, -$325.8 million, and -$619.4 million.

As far as what to expect ahead, we cannot even make heads or tails of the expectations.  Thomson Reuters has estimates of $5.12 billion in sales for 2012 and $5.45 billion in 2013.  Earnings estimates are -$21.94 per share in 2012 and -$12.98 per share in 2013.  The loss per share was -$196.12 in 2011.

The long and short is that the losses here in earnings and in shareholder value are so great that you have to wonder just how important the Fortune 500 really is.

JON C. OGG

The fall in gasoline pump prices has surely had the most impact on the better reading, while consumers appear to discount the relatively weak reports on employment as a seasonal dip rather than a new downward trend. The rise in consumer sentiment is mirrored in today’s release of the producer price index, which fell -0.2% in April, led by a -1.4% drop in oil prices (more coverage here).

The good reports on inflation and consumer sentiment have pulled US equities out of the doldrums where they began the day. The DJIA is up 0.13%, the Nasdaq composite is up 0.64%, and the S&P 500 is up 0.16% after starting today’s trading session about -0.5% below yesterday’s close.

Today’s quote is hard to take as positive considering that it says that the S&P could run down to 1,000 into a breakup of the Euro.  The crux of the report noted, “Although most risk indicators are neutral (sentiment, risk appetite, insider buying) we think on a 3- to 12-month view equities still have the best risk-reward trade-off among the major asset classes – we stay overweight.”

As far as sectors, Credit Suisse calls on the ‘dollar earners’ and is overweight drugs and the key pharma ETF is Market Vectors Pharmaceutical ETF (AMEX: PPH) but that ETF was not mentioned in the Credit Suisse call.

JON C. OGG