US stocks fell on Tuesday as Goldman Sachs warned that banks may need to raise an additional $65 billion, stoking worries about further fallout from the mortgage crisis. Goldman said the global credit crisis will not peak until 2009 and lowered its price targets for 14 banking companies. It also cut 2008 earnings-per-share forecasts for 11 banks.
Shares of Bank of America, whose target price was cut by Goldman, tumbled 2.5 percent and were the biggest drag on the S&P 500. The warning on the outlook for banks offset the market's upbeat reaction to Goldman Sachs Group Inc's release of its own quarterly earnings, which exceeded Wall Street expectations even though they were down 11 percent from a year earlier.
The Dow Jones industrial average dropped 75.96 points, or 0.62 percent, to 12,193.12. The Standard & Poor's 500 Index slipped 5.13 points, or 0.38 percent, to 1,355.01. The Nasdaq Composite Index fell 8.53 points, or 0.34 percent, to 2,466.25. The S&P financial index fell nearly 2 percent. Shares of Bank of America, the No 2 US bank, were down 68 cents at $29.63. after Goldman cut the bank's profit forecast.