Stocks skid lower as housing pain spreads
NEW YORK » U.S. stocks fell as worse-than-expected home sales and an increase in missed payments by AT&T Inc.'s customers sent the Standard & Poor's 500 Index to the lowest level since March.
AT&T declined the most in almost four years after Chief Executive Officer Randall Stephenson said the biggest U.S. phone company faces "softness" in its consumer business. Countrywide Financial Corp., the largest U.S. mortgage lender, tumbled the most since October 1987 on concern it has a funding shortage.
The Standard & Poor's 500 Index lost 25.99, or 1.8 percent, to 1,390.19, the lowest since March 16. The Dow Jones Industrial Average slipped 238.42, or 1.9 percent, to 12,589.07. The Nasdaq Composite Index retreated 58.95, or 2.4 percent, to 2,440.51. Nine stocks dropped for every two that rose on the New York Stock Exchange.
The S&P 500 closed more than 10 percent below its Oct. 9 record for the first time since Nov. 26 as evidence mounted that rising energy costs, declining home values and higher unemployment will force Americans to reduce spending.
"The consumer is finally getting pinched, and that's probably going to cut a lot deeper than people thought," said Dan Genter, who helps manage $2.8 billion as president of RNC Genter Capital Management in Los Angeles. "This market is very, very vulnerable. That is shining through now."
AT&T dropped $1.87, or 4.6 percent, to $39.16. Stephenson said the company is disconnecting more home-phone and high-speed Internet customers for failing to pay their bills. The pressure hasn't affected the mobile-phone unit or corporate sales, he said at a conference in Phoenix yesterday.
Phone companies in the S&P 500 dropped 4.8 percent as a group for the steepest slide since February 2003. Verizon Communications Inc., the second-biggest U.S. phone company, lost 93 cents to $41.99.
Countrywide lost $2.17, or 28 percent, to $5.47, the lowest since July 1996.
"There is no substance to the rumor that Countrywide is planning to file for bank-ruptcy," spokesman Rick Simon said. Countrywide has said it has adequate liquidity to run its business and predicted in October that it will be profitable this year.
Bank of America Corp., Lennar Corp. and MBIA Inc. led banks, builders and mortgage-bond insurers lower after the number of Americans signing contracts to buy previously owned homes fell more than forecast in November.
The National Association of Realtors' index of pending home sales decreased 2.6 percent to 87.6, following a 3.7 percent gain in October that was larger than previously estimated, the group said.
Economists predicted the index would fall 0.7 percent following a previously reported 0.6 percent October increase, according to the median of 33 projections in a Bloomberg News survey.
Bank of America, which invested $2 billion in Countrywide in August, dropped $1.49 to $38.41, the lowest since December 2003. MBIA Inc., the largest bond insurer, fell $3.64 to $13.98, a 16- year low. The 92-member S&P 500 Financials index dropped 3.7 percent, extending its decline over the past year to 28 percent.