Wednesday's early afternoon trade: Wall Street drops as Ambac drags on financials

US stocks fell on Wednesday as disappointment about bond insurer Ambac Financial Group Inc's capital raising-plan sparked a sell-off in financial shares. Ambac, the second-largest bond insurer facing billions of dollars of expected losses from guaranteeing repackaged subprime mortgages, said it will sell at least $1.5 billion of shares and equity-linked securities to help boost capital.
Shares of Bank of America, Corp, the No 2 US bank, declined 2.1 percent to $37.37 on the New York Stock Exchange and J.P. Morgan Chase & Co, the third-largest US bank, dropped 1.9 percent to $38.45. Ambac shares tumbled 14.6 percent to $9.16 on the NYSE.
The Dow Jones industrial average fell 47.95 points, or 0.39 percent, at 12,165.85. The Standard & Poor's 500 Index slipped 4.21 points, or 0.32 percent, to 1,322.54. The Nasdaq Composite Index dropped 2.75 points, or 0.12 percent, to 2,257.53.