MarketView for June 25

Summary 

It was a sharp decline for the major equity indexes on Monday, bringing the S&P 500 back down to a near break-even level for June, as many on the Street saw little reason to be optimistic about the situation within the European Union. For the month, the Dow is up 0.88 percent while the S&P 500 is up 0.26 percent. The Nasdaq is up 0.31 percent.

Regardless of whether it makes sense or not, the financial markets remain sensitive to European headlines as the region's spiraling debt crisis could wreak further havoc on a slowing global economy.

Financial and energy stocks were among the key sectors that dragged heavily on security prices. Crude futures lost 0.7 percent to remain near the eight-month low hit last week. News that Spain had requested help for its struggling banks did nothing to help the situation. Spain formally requested euro zone rescue loans for up to 100 billion euros ($125 billion) to recapitalize its banks, saying the final amount of assistance would be set at a later stage. Some market economists say it is merely a prelude to a full bailout for Spain.

Spanish government bonds came under pressure with the 10-year bond yield up almost 30 basis points at 6.64 percent, near the 7-percent mark that forced other indebted European countries to ask for bailouts. Meanwhile, expectations for the two-day EU summit, which starts on Thursday, are low after Germany resisted pressure for common euro zone bonds or a flexible use of Europe's rescue funds at a meeting of the region's four biggest economies last week.

Austerity measures pushed forward by Germany have Greece mired in a long recession. Investors worry Spain could be the next domino to fall as Madrid's borrowing costs remain stubbornly high.

Among individual stocks, Chesapeake fell 8.5 percent to $17.03 as the worst performer on the benchmark S&P 500 index. Reuters reported that under the direction of Chief Executive Aubrey McClendon, the company plotted with its top competitor to suppress land prices in one of America's most promising oil and gas locations.

New domestic single-family home sales surged in May to a seasonally adjusted 369,000-unit annual rate, the highest since April 2010, and prices rose from a year ago amid tightening supply. But the European concerns outweighed any signs of life in the long-struggling industry.

Wal-Mart was the lone advancer on the Dow. Wal-Mart Canada said the company is opening of 47 hiring centers across Canada to support its growth plans. The stock rose 1.3 percent to $68.18.

Volume was light with about 5.84 billion shares changing hands on the three major equity exchanges, well below the daily average of 6.85 billion shares.

Microsoft to Buy Yammer

Microsoft agreed to buy online social network firm Yammer for $1.2 billion in cash, which will allow the software company to offer a service like Facebook's to corporate customers. Talk of a deal had circulated earlier this month, but the two companies only confirmed an agreement on Monday.

Four-year-old Yammer, which has 5 million users of its private, in-company social networks, helps companies' internal communications and collaboration by allowing employees to form groups and interact with each other freely. Companies such as Ford, Supervalu and Deloitte are customers.

The 400-employee firm will keep its headquarters in San Francisco but will become part of Microsoft's Office unit under Kurt DelBene in Seattle. Yammer will still be led by current CEO David Sacks, a former PayPal executive.

The service should fill a growing gap that Microsoft was struggling to fill with its SharePoint application for creating private websites for intra-company projects.

With Yammer, employees can use a private, online company directory to contact co-workers, form networks, chat, share links and post news. A basic version of Yammer is free, but a subscription buys more security and integration with other company-wide software. Yammer's subscription-based business model makes it different from ad-driven network companies like Facebook or LinkedIn Corp.

The deal, which values Yammer's users at about $240 each, may ignite interest in companies offering similar services, such as Salesforce.com, Jive Software and Telligent.

The area of internal networking for companies has attracted other big tech companies such as Cisco Systems, which has a similar offering to Yammer called WebEx Social, and IBM with a rival product called Connections.

Microsoft, which owns a small fraction of Facebook shares, has been looking for ways to make its desktop-bound products more interactive and attractive to its core corporate users and home consumers, and has even been experimenting with its own social network called So.cl (pronounced 'social').

Last year it paid $8.5 billion to buy online chat company Skype, which it is integrating into its offerings, including the next version of Office. Microsoft's Office suite of applications - including Outlook email, Excel spreadsheets and PowerPoint presentation program - is the bedrock of most companies' day-to-day working software.

The Office unit is Microsoft's most profitable, contributing 60 percent of its profit last year, and amassing more sales than its flagship Windows operating system.