US stocks traded lower on Tuesday, after rumours of more financial problems at Countrywide Financial Corp, the largest US mortgage lender, sent housing-related shares down sharply, extinguishing a rally on Wall Street.
Shares of Countrywide plunged 24.2 percent to $5.79 on the New York Stock Exchange and touched a near eight-year low. Other big decliners were shares of mortgage bond insurers MBIA Inc, down 13.9 percent at $15.15, and AMBAC Financial Group Inc, down 18.3 percent to $19.20.
Countrywide was not immediately available to comment. "There is renewed speculation that Countrywide will declare bankruptcy or have some default action," said Al Greenberg, head floor trader at broker-dealer BNY ConvergEx Group in Chicago.
The Dow Jones industrial average was down 45.52 points, or 0.35 percent, at 12,781.97. The Standard & Poor's 500 Index was down 2.13 points, or 0.15 percent, at 1,414.05. The Nasdaq Composite Index was down 3.15 points, or 0.13 percent, at 2,496.31. The Dow Jones Home Construction index slumped 3.8 percent to 265.02 points, after earlier falling as low as 261.33, the lowest level since October 2002.
Helping to stave off declines on the Nasdaq were shares of Starbucks Corp. The coffee chain said late on Monday Howard Schultz, its founder and chairman, will take on the additional role of chief executive and the company would slow an aggressive US expansion. Starbucks stock was up 9.5 percent at $20.13.
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