[obrolan-bandar] U.S. Stocks Tumble, Led by Banks, Builders on Housing Concern
U.S. Stocks Tumble, Led by Banks, Builders on Housing Concern By Lynn Thomasson July 24 (Bloomberg) -- U.S. stocks tumbled, sending financial shares to their worst drop in eight years, after home sales slid more than forecast and investor Bill Gross predicted the housing slump will cost banks and brokerages $1 trillion. Citigroup Inc., Bank of America Corp. and Goldman Sachs Group Inc. retreated and shares of builders posted their biggest decline ever as a report showed sales of previously owned homes fell to the lowest level in a decade. Ford Motor Co., the world's third-largest carmaker, plunged the most since August 2000 after reporting a loss twice as big as analysts estimated. ``I would feel very uncomfortable for the average investor to get too aggressive in financials,'' said Stephen Wood, who helps manage $213 billion as a senior portfolio strategist at Russell Investments in New York. The recovery in the housing market ``isn't going to be coming any time soon.'' The Standard Poor's 500 Index dropped the most since June 26, losing 29.65 points, or 2.3 percent, to 1,252.54. The Dow Jones Industrial Average slid 283.1, or 2.4 percent, to 11,349.28. The Nasdaq Composite Index tumbled 45.77, or 2 percent, to 2,280.11. Five stocks retreated for each that gained on the New York Stock Exchange. European shares declined as German business confidence sank, while Asian shares advanced. Banks Tumble Financial stocks in the SP 500 fell 6.7 percent as a group, the third drop in the past three weeks greater than 5 percent. Today's slump follows a six-day, 30 percent rally spurred by better-than-estimated earnings reports from Citigroup, JPMorgan and Wells Fargo and legislation to rescue Fannie Mae and Freddie Mac. The SP 500 pared its rebound from an almost three-year low on July 15 to 3.1 percent. Citigroup, the largest U.S. bank by assets, lost 9.8 percent to $19.06. Bank of America, the second-biggest, sank 8.4 percent to $30.64. JPMorgan, the No. 3, retreated 6.7 percent to $39.14. Goldman, the biggest securities firm, slid 4.1 percent to $180.26. The slump in sales of previously owned U.S. homes signaled weakening consumer confidence is hurting demand. Resales dropped 2.6 percent to a lower-than-forecast 4.86 million annual rate from a 4.99 million pace the prior month, the National Association of Realtors said. The median home price dropped 6.1 percent from June last year. Washington Mutual Slides Washington Mutual Inc. dropped 13 percent to $4.03, bringing the stock's two-day decline to 31 percent. Gimme Credit LLC said unsecured creditors were ``pulling funds'' from the biggest U.S. savings and loan, citing a decline in federal funds purchased and commercial paper. The company fell yesterday after Piper Jaffray Cos. advised investors to sell the stock and Merrill Lynch Co. and Friedman Billings Ramsey Group Inc. analysts said the bank may need more capital. Washington Mutual said in an e-mailed statement that it does all of its business through banking operations and ``does not rely on commercial paper.'' The 28 percent jump in the SP 500 Financials Index during the five trading days ended July 22 was the biggest one-week advance for any of the SP 500's 10 industry groups since daily calculations on the indexes began in 1989, according to Harrison, New York-based research firm Bespoke Investment Group LLC. An SP index of 15 homebuilders slumped 12 percent, its biggest drop ever, as 13 of its companies retreated. Ryland Group Inc., the U.S. homebuilder for first-time buyers, tumbled 19 percent to $21.43 and led the group's decline after reporting a second-quarter loss that exceeded analysts' estimates. A total of $5 trillion of mortgage loans belong to ``risky asset categories,'' Gross, manager of the world's largest bond fund at Pacific Investment Management Co., said in commentary posted on the firm's Web site today. $1 Trillion Forecast His $1 trillion forecast implies that credit-market losses are less than halfway over. Since the start of 2007, global financial firms have reported $468.1 billion in losses and writedowns, according to data compiled by Bloomberg News. Firms worldwide have raised $344.6 billion of capital since the third quarter of 2007. ``As long as housing prices go down, no one can say how much the banks are going to lose and how long it will last,'' said Charles Knott, who oversees $800 million as chief investment officer at Knott Capital Management in Exton, Pennsylvania. The number of vacant houses hit an all-time high in the second quarter as the U.S. real estate recession pushed homeowners into foreclosure and lenders seized properties. A total of 18.6 million U.S. homes stood empty, more than at any time in history and 6.9 percent higher than a year earlier, the U.S. Census Bureau said. Consumer Shares Slide Homebuilders, automakers and hotel owners dragged a group of consumer stocks down 2.8
[obrolan-bandar] U.S. Stocks Tumble
U.S. Stocks Tumble; Fed Says Economy Is Slowing, Rates May Rise By Eric Martin April 11 (Bloomberg) -- U.S. stocks posted their first decline this month after the Federal Reserve said the economy may slow without curbing inflation, raising the specter of higher interest rates. General Motors Corp., Wal-Mart Stores Inc. and International Business Machines Corp. led the Dow Jones Industrial Average to end its longest streak of gains since 2003. Citigroup Inc. and Bank of America Corp. sent financial shares tumbling. Minutes from the Fed's last policy meeting added to concern after the International Monetary Fund said the U.S. economy will expand at its slowest pace in five years. Fed officials said higher borrowing costs may ``prove necessary'' and gave no hint of a rate cut. ``They still have their finger on the trigger for raising interest rates,'' said John Huber, who oversees about $23 billion at Transamerica Investment Management in Los Angeles. ``The stock market can trade in this range until we get confirmation inflation has been nipped in the bud.'' The Dow average retreated 89.23, or 0.7 percent, to 12,484.62, its first drop since March 28. The Standard Poor's 500 Index slid 9.52, or 0.7 percent, to 1438.87. The Nasdaq Composite Index decreased 18.30, or 0.7 percent, to 2459.31. GM, the biggest carmaker, lost 62 cents to $31.46. Wal-Mart, the largest retailer, slipped 67 cents to $47.27. IBM, the No. 1 computer-services company, declined $1.30 to $95.16. `Further Firming' Stocks fell to their lows of the day after the Fed released minutes from the Open Market Committee's March 20-21 meeting. Increased uncertainty had prompted policy makers to remove a reference in their statement to tighter credit. ``Further policy firming might prove necessary to foster lower inflation,'' according to the minutes. ``But in light of the increased uncertainty about the outlook for both growth and inflation, the committee also agreed that the statement should no longer cite only the possibility of further firming.'' The ``worst-case scenario'' for investors is a period of heightened inflation and slowing growth, known as stagflation, said Art Hogan, the Boston-based chief market analyst at Jefferies Co. ``That's the 800-pound elephant in the room that no one likes to talk about,'' Hogan said. ``You're fighting two things at the same time and monetary policy is rendered useless while that's going on.'' While the decision to alter the statement led some economists to say it increased the chance of a rate cut, Fed Chairman Ben S. Bernanke said on March 28 that the Fed hadn't shifted to a ``neutral'' stance. Lacker Comments In comments today, Richmond Fed Bank President Jeffrey Lacker reiterated his view that policy makers must be wary of relying on consumers' and investors' expectations for prices to pull down inflation. Treasuries fell and the dollar strengthened against the euro after the release of the minutes. Oil was little changed at $62.01 a barrel in New York. ``The Fed coming out and saying they continue to be worried about inflation means the relief is not yet here for banks,'' said Huber. Financial shares were the biggest drag on the SP 500 among 10 industries, sliding 0.8 percent as a group. The absence of a rate cut may slow demand for mortgages and loans, as well as lower the value of bonds owned by banks, brokers and insurers. Citigroup Citigroup slumped 60 cents to $51.80 on concern its cost- cutting plan is too modest. The biggest U.S. bank aims to reduce annual spending by $4.6 billion in the next three years to and eliminate 17,000 jobs, or 5 percent of its workforce. Citigroup will take a $1.38 billion pretax charge in the first quarter, along with additional charges of about $200 million in subsequent quarters this year. ``There's some room for them to do a lot more,'' said Anton Schutz, who oversees about $270 million as president of Mendon Capital Advisors in Rochester, New York. ``A lot of these things are obvious and should have been done over the years.'' Schutz owns put options on Citigroup, which give him the right to sell the stock at a specified price. Bank of America slid 56 cents to $50.51. JPMorgan Chase Co. fell 9 cents to $49.15. Rising mortgage loan delinquencies may constrain home purchases and hobble the housing market's recovery, the Fed said. Homebuilders Homebuilders tumbled 2 percent to the lowest since August. The subprime loan ``debacle'' will make it more difficult for borrowers to get mortgages and will cause U.S. home prices to fall this year for the first time on record, the National Association of Realtors said. The 2007 median price for an existing home likely will decline 0.7 percent to $220,300, the first drop since the real estate trade group began keeping records in 1968 and probably the first decline since the Great Depression, the association said. For new
