US stocks fell for a third session on Monday, as investors dumped financial shares on fears of more credit losses and concerns that the US economy may already be in recession. The sell-off in financial stocks picked up speed after rumours circulated that Bear Stearns Co Inc was facing a cash shortage.
The brokerage called the speculation "totally ridiculous," but Bear Stearns shares still ended the day down 11.1 percent at $62.30. Financials were among the top drags as the Bear Stearns rumours strengthened the conviction that banks would report further deep credit losses. Shares of Bank of America Corp fell 3.9 percent to $35.31, while rival Citigroup Inc slid 5.8 percent to $19.69.
Shares of health insurers fell after the bell as WellPoint Inc cut its 2008 profit outlook, citing higher-than-expected medical costs and lower-than-expected enrolment. Texas Instruments' stock also sank after the market closed as the company cut its first-quarter profit and revenue outlook. The news also hurt other chipmakers and may weigh on Nasdaq in Tuesday trading.
Adding to the market's woes, gold futures and other metal prices sank, pulling down shares of mining companies such as Freeport-McMoRan Copper & Gold Inc, which fell 5.9 percent to $93.97. Material stocks were among the S&P's top decliners.
"There's kind of an overhang of concerns about weakening US economic conditions spreading globally," said Frederic Dickson, a market strategist at D.A. Davidson & Co in Lake Oswego, Oregon. The Dow Jones industrial average tumbled 153.54 points, or 1.29 percent, to close at 11,740.15 in its seventh decline in its last eight sessions.
The Standard & Poor's 500 Index shed 20.00 points, or 1.55 percent, to finish trading at 1,273.37. The Nasdaq Composite Index dropped 43.15 points, or 1.95 percent, to close at 2,169.34. Shares of WellPoint fell 19 percent to $54.50 in after-hours trading, while Aetna Inc dropped 11.2 percent to $41.70 and UnitedHealth Group Inc sank 9.3 percent to $41.00.
In other trading after the bell, Texas Instruments shares slid 2.6 percent to $28.53. "I think what we're seeing with the industrial companies is that there's just more growing concern about economic slowdown cutting into international industrial business," Dickson said.
Recession concerns hit shares of big manufacturers, including Boeing Co, which led the Dow's decliners with a drop of 2.9 percent to $74.38. General Motors Co fell 4.9 percent to $20.89 after a Lehman Brothers analyst said major automakers are at risk of being squeezed by both declining sales and rising commodity prices.
Citigroup, another big Dow loser, forecast $9 billion in write-downs at US investment banks in the first quarter, driven largely by leveraged loan and mortgage-related losses.
Among gainers, shares of Dow component McDonald's Corp climbed 2.9 percent to $53.80 after the world's largest hamburger chain said sales at established stores jumped 11.7 percent globally in February.
Volume was moderate on the New York Stock Exchange, where about 1.61 billion shares changed hands, below last year's estimated daily average of 1.9 billion shares. On the Nasdaq, about 2.15 billion shares traded, just below last year's daily average of 2.17 billion. Declining shares outnumbered advancing ones on the NYSE by a ratio of more than 5 to 1 and more than 3 to 1 on the Nasdaq.
Comments
Comments are closed.