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June 1st, 2010
12:36 PM ET

Financial Dispatch: Wall Street punishes BP

Andrew Torgan
CNN Business News Producer

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2010/US/06/01/gulf.oil.spill/smlvid.ship.jpg caption="Stock markets all around the globe got their first chance to react to the news that BP’s “top kill” operation last week was a failure." width=300 height=169]

Stock markets all around the globe got their first chance to react to the news that BP’s “top kill” operation last week was a failure.

BP's stock sank 12% at the open on Wall Street to around $38 a share. In London, where the former “British Petroleum” is headquartered, the stock tumbled 14%. Overall, BP shares have plummeted nearly 40% since the Deepwater Horizon oil rig exploded in the Gulf of Mexico on April 20.

But BP is not alone. Shares of ExxonMobil are down about 11% and Chevron’s stock is down more than 9%.

Crude oil, by the way, is also down 11% and gasoline prices are off an average of nearly 5% nationwide.

As of Saturday, BP said costs related to the spill began to approach $1 billion. And analysts have thrown out a wide range of estimates - from $4 billion to $25 billion - on how hard the leak will hurt the company's bottom line.

By way of comparison, ExxonMobil paid $3.4 billion in cleanup costs for the Exxon Valdez spill in Alaska - but ultimately only paid $507.5 million for the legal settlement and $500 million in interest payments.

Traders close the books on brutal month

Wall Street likes nothing more than a good maxim, such as “As goes January, so goes the year.” Another popular saying is “Sell in May, go away.”

And sell we did…

Traders returning to work today after the long holiday weekend have bid farewell to the Dow's worst May in 70 years.

For the month, the blue chips lost 7.9%. That’s the Dow’s worst month since February 2009, when the index fell 11.7%, and the worst May since 1940, when it plunged 21.7%.

The Nasdaq lost 8.3%, its worst month since November 2008, when it dropped 10.8%, and its worst May since 2000, when it skidded 11.9%.

The S&P 500 declined 8.2%, its worst month since February 2009, when there was an 11% loss, and its worst May since 1962, when the drop was 8.6%.

On the docket this week, investors will get snapshots of housing and construction spending, the manufacturing and service sectors, car and truck sales and the all-important May jobs report. Economists surveyed by Briefing.com are looking for the addition of 500,000 jobs last month - but also a slight uptick in the unemployment rate.

Big job cuts at HP

Hewlett-Packard says it plans to cut 3,000 jobs over the next few years as it ramps up its use of automated data centers.

The world's largest computer maker says it will invest $1 billion in building up automated data centers to service its business customers. HP will also cut about 9,000 jobs in its enterprise services division as a result, but over the same time period, the company expects to add about 6,000 employees to its sales and delivery teams.

The 3,000 cuts are in addition to the nearly 25,000 employees HP said it would lay off after it bought Electronic Data Systems in August 2008.

Another floor mat issue

Federal safety regulators are warning owners of 2010 Ford Fusion and Mercury Milan sedans of possible dangers from floor mats.

Owners have been told that told gas pedals could become stuck if all-weather floor mats are stacked on top of the cars' standard mats.

“Any Ford 'All Weather' optional floor mat should be placed in the driver's side foot well only after first unfastening and removing the standard, carpeted floor mat," the National Highway Transportation Safety Administration said in a statement Friday. "This is the only way to ensure that the 'All Weather' optional floor mat is physically secured to the floor."

Last fall, Toyota recalled about 5 million vehicles because of a similar issue. That recall began after a family was killed in a crash that was apparently caused by a gas pedal trapped by an all-weather floor mat.

Follow the money… on Twitter: @AndrewTorganCNN


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