Financial shares drove US stocks down sharply on Thursday after news of a default at a home lender and a report showing US mortgage foreclosures reached a record high. Shares of energy companies also weighed on the market as oil prices eased from record highs, with Exxon Mobil Corp down 2.1 percent.
Thornburg Mortgage Inc, a "jumbo" mortgage lender, said it had received a letter from J.P. Morgan Chase notifying it of a default after it failed to meet a margin call of about $28 million. Its shares tumbled 56 percent. The Mortgage Bankers Association said US home foreclosures and the rate of homes entering foreclosure hit record highs in the fourth quarter of 2007.
Shares of hard-hit bond insurer Ambac Financial Group dropped almost 10 percent to $7.86. Ambac's slide followed news that banks have made a firm commitment to buy more than $500 million of its shares in a planned $1.5 billion offering - if other investors don't buy them, according to a person briefed on the matter.
The Dow Jones industrial average was down 140.02 points, or 1.14 percent, at 12,114.97. The Standard & Poor's 500 Index was down 19.67 points, or 1.47 percent, at 1,314.03. The Nasdaq Composite Index was down 26.18 points, or 1.15 percent, at 2,246.63.
Exxon Mobil shares fell $1.84 to $85.35 as US crude oil futures dropped $1.32 to $103.20 a barrel. Among the Nasdaq's biggest gainers, Oracle Corp shares rose 3.3 percent to $19.41 after the company's stock received a brokerage upgrade, according to theflyonthewall.com.