Markets turn down as credit anxiety persists
NEW YORK » Wall Street ratcheted its way through a fractious session today before finally closing lower on expectations of further fallout from the ongoing credit crisis. The Dow Jones industrials, up more than 100 points during the day, ended below 13,000 for the first time since August.
News stories kept the subprime contagion in focus. Late Friday, E-Trade Financial Corp. said the value of its mortgage-backed securities has fallen significantly and that it will need to take bigger-than-expected write-downs in the fourth quarter.
Meanwhile, troubled home lender Countrywide Financial Corp. said in a U.S. regulatory filing it could be "severely" limited if its credit rating drops into junk status. And Britain's HSBC Holdings PLC was seen as the next major financial institution to write down losses from exposure to the debt markets, according to a report from the Times of London.
"The problem is just the mood of the market," said Peter Cardillo, chief market economist at Avalon Partners. "There is a tense feeling that there will be still more problems with the subprime situation and a fear that things are going to get worse rather than better."
Selling was especially strong in tech stocks. Apple Inc. fell more than 7 percent after analysts described the weekend European launch of the iPod as disappointing.
The Dow fell 55.19, or 0.42 percent, to 12,987.55, after falling 4.06 percent last week. The last time the Dow traded below 13,000 was on Aug. 17, when it index hit a low of 12,847.24, and the last time it closed below 13,000 was on Aug. 16, when it ended at 12,845.78.
The Dow has fallen 1,210.55, or 8.53 percent, from the all-time trading high of 14,198.10 that it reached Oct. 11. Its record high close was 14,164.53, set Oct. 9.
The Standard & Poor's 500 index yesterday fell 14.52, or 1 percent, to 1,439.18, while the Nasdaq composite index dropped 43.81, or 1.67 percent, to 2,584.13. The Russell 2000 index of smaller companies fell 5.29, or 0.68 percent, to 767.09.
Falling issues outnumbered advancing shares by about 2 to 1 on the New York Stock Exchange, where volume came to 1.71 billion shares compared with 1.62 billion shares Friday.
The dollar rebounded against other major currencies, bolstered by a sharp decline in the price of gold. Gold futures briefly fell under $800 an ounce before recovering some strength to close down $27 at $807.70 an ounce.
Light, sweet crude fell $1.70 to $94.62 a barrel on the New York Mercantile Exchange. The drop came on reports that OPEC would discuss increasing its output at an upcoming meeting in a bid to cool record crude prices.
Apple fell $11.61, or 7 percent, to $153.76. E-Trade plunged $5.04, or 58.7 percent, to $3.55, while Countrywide fell 64 cents, or 4.6 percent, to $13.19.
There was deal news that perhaps helped contain the market's slide: IBM Corp. said it will buy software developer Cognos Inc. for $5 billion, sending Cognos stock up $4.17, or 7.9 percent, to $57.15. IBM rose $1.20 to $101.45.
And Constellation Brands Inc. said it will pay $885 million for the U.S. wine business of Fortune Brands Inc. Constellation Brands dropped 39 cents to $22.60 as Fortune Brands shares rose 49 cents to $79.66.
Tyson Foods Inc. fell 42 cents, or 2.9 percent, to $14.33 after the world's largest meat company forecast earnings for this year that were below what analysts were expecting.