Wall Street sinks

US stocks dropped on Thursday as an assassination in Pakistan sparked fears of global unrest, while an analyst warning of larger mortgage-related write-offs pressured financial shares. A weak durable goods report raised concerns about the outlook for the US economy and added to the gloomy sentiment before the market's opening bell.
A Goldman Sachs analyst said Citigroup Inc, Merrill Lynch & Co and J.P. Morgan Chase & Co might face larger fourth-quarter debt write-offs than previously expected, while Citigroup may also need to cut its dividend. But bearish sentiment was set early in the day, with news of the assassination of Pakistani opposition leader Benazir Bhutto sparking worries across the globe about the nuclear-armed state.
"We kind of got a double whammy this morning with the assassination and the durable goods orders," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. Talk of more write-downs by financial services companies added to the nervousness, he said.
"That wasn't exactly what the market wanted today. Anybody who was looking for a quick pop just walked away." The Dow Jones industrial average sank 192.08 points, or 1.42 percent, to end at 13,359.61. The Standard & Poor's 500 Index slid 21.39 points, or 1.43 percent, to 1,476.27. The Nasdaq Composite Index tumbled 47.62 points, or 1.75 percent, to 2,676.79.
The Nasdaq snapped a six-day streak of gains, its first since late May, although trading volume was well below average. Financial stocks led losses in the S&P 500. An index of S&P financial shares fell 1.4 percent. Merrill Lynch dropped 2.5 percent to $53.20, while J.P. Morgan shares fell 2.9 percent to $43.64 on the New York Stock Exchange.
Citigroup's shares slid 2.9 percent to $29.56. The Goldman analyst said Citigroup may have to slash its dividend by 40 percent to preserve capital. Orders for US durable goods, which are big-ticket items such as computers and appliances, rose a slender 0.1 percent in November, well below economists' forecast for a 2 percent gain.
Adding to the uneasiness about the economy's health, new applications for US jobless benefits unexpectedly rose in the latest week. Shares of companies sensitive to the economic cycles were down, including Boeing Co, down 1.2 percent at $88.88 on the NYSE.
The Philadelphia Semiconductor Index fell 1.8 percent as American Technology Research said investors should brace for weak business in the first half of 2008 at Applied Materials, the largest maker of semiconductor production tools.
Applied Materials declined 2.4 percent to $17.76, while shares of the world's No 1 chip maker, Intel Corp dropped 2.3 percent to $26.83, both in Nasdaq trading.
Trading was light on the NYSE, with about 984 million shares changing hands, well below last year's estimated daily average of 1.84 billion. On the Nasdaq, about 1.45 billion shares traded, below last year's daily average of 2.02 billion. Decliners outnumbered advancers by a ratio of about 3 to 1 on both the NYSE and the Nasdaq.