This shit was suppose to be over.............
U.S. Stocks Decline on Credit Concern; AIG, Comcast Shares Drop
By Lynn Thomasson
Oct. 25 (Bloomberg) -- U.S. stocks fell for a second day on concern more financial companies will announce writedowns linked to credit-market losses.
American International Group Inc. tumbled the most since April 2005 on speculation the world's largest insurer will be the next to report a charge stemming from subprime mortgage defaults. Comcast Corp., the largest U.S. cable-television company, posted its biggest drop since 2002 after the housing slump reduced the number of new subscribers.
The Standard & Poor's 500 Index slipped 9.35, or 0.6 percent, to 1,506.53 at 1:51 p.m. in New York. The Dow Jones Industrial Average lost 75.35, or 0.6 percent, to 13,599.9. The Nasdaq Composite Index fell 31.32, or 1.1 percent, to 2,743.44.
``There's speculation going around that AIG was going to take a large writedown,'' said Mike Capitani, head of equity trading at Caris & Co. in New York. ``The market had already been drifting lower, but that took us down another leg.''
Writedowns spurred by the worst housing slump in 16 years have caused profits at financial companies in the S&P 500 to decline 24 percent in the third quarter, the worst performance among 10 industries. Merrill Lynch & Co. posted its biggest quarterly loss in its 93-year history yesterday on charges totaling $8.4 billion and Bank of America Corp.'s profit dropped 32 percent after $2 billion in trading losses and writedowns.
Stocks also fell after government reports showed an unexpected drop in durable goods orders and initial unemployment claims topped economists' forecasts, spurring concern the economy may slip into a recession. Almost two-thirds of Americans say the economy is likely to contract next year and a majority believes it is already faltering, according to a Bloomberg/Los Angeles Times survey.
AIG, MBIA
AIG sank $4.31, or 6.8 percent, to $59.53, leading the S&P 500 Financials Index to a 1.6 percent decline. Chris Winans, spokesman for AIG, said the company doesn't comment on market speculation.
MBIA lost $10.94, or 20 percent, to $44.25. The world's biggest bond insurer reported its first-ever quarterly loss on writedowns stemming from mortgage-related securities. It also halted a stock-buyback program to retain capital.
MGIC Investment Corp. slumped $2.33, or 12 percent, to $17.41. The largest U.S. mortgage insurer cut its quarterly dividend 90 percent to 2.5 cents a share.
Comcast, Cummins
Comcast dropped $2.61, or 11 percent, to $21.24. New phone and Internet-service customers at the largest U.S. cable- television company missed some analysts' predictions in the third-quarter. The slump in U.S. home sales meant fewer new subscribers for Comcast and other cable-TV providers, said Sanford C. Bernstein & Co. analyst Craig Moffett.
Cummins Inc. plunged $23.43, or 18 percent, to $110.30 for the second-steepest loss in the S&P 500. The engine maker reported third-quarter earnings that rose less than analysts anticipated on higher costs related to new truck engines that meet stricter emissions standards.
Eli Lilly & Co. slid $3.90 to $52.25 after the world's biggest maker of psychiatric drugs said it suspended two studies of the anti-clotting drug prasugrel to make possible adjustments to dosing. Morgan Stanley cut its recommendation on the stock to ``underweight'' from ``equal-weight.'' Goldman, Sachs & Co. removed the stock from its ``conviction buy'' list.
Big Lots Inc. slumped $3.74, or 14 percent, to $23.78. The largest U.S. seller of overstocked items fell the most in almost five months after cutting its third-quarter sales forecast. Same- stores sales may decrease ``slightly'' in the quarter, the company said. It had previously forecast an increase.
Symantec Corp. dropped $2.75 to $18.27. The world's biggest maker of security software posted a 60 percent drop in profit and forecast earnings for this quarter that missed analysts' estimates.
Durable Goods
The 1.7 percent decline in durable goods orders followed a 5.3 percent decrease in the prior month, Commerce Department figures showed. Excluding a 39 percent decline in defense equipment, orders rose 0.7 percent.
Initial jobless claims decreased by 8,000 to 331,000 in the week that ended Oct. 20 after reaching a six-month high the prior week, the Labor Department said. Economists polled by Bloomberg had estimated 320,000 applications.
``We're seeing evidence that the consumer is retrenching and spending less,'' said Igor Golalic, who manages $2.5 billion at Federated Investment Inc. in Pittsburgh. ``It's really worrisome. I would not call this a healthy market.''
Benchmark indexes rose earlier in the day after Motorola Inc. posted its first profit in three quarters and home sales unexpectedly increased in September.
Motorola, the largest U.S. maker of mobile phones, added 76 cents, or 4.1 percent, to $19.31. The company also said it expects earnings per share before some items of 12 cents to 14 cents in the fourth quarter, more than the 11 cents estimated by analysts.
Technology Rally
Technology shares in the S&P 500 have climbed 3.9 percent over the last three months, the best performance among 10 industries, as investors sought companies with the least at risk from the housing slump. The group is projected to post a 23 percent increase in profits in 2008, the highest in the index according to a Bloomberg survey, as global growth is expected to boost demand even if the U.S. slips into recession.
``Technology appears to be doing well and I think you'll continue to see that industry lead,'' said Sal Arnuk, partner at Themis Trading LLC in Chatham, New Jersey. ``We're setting up for a nice rebound.''
EMC, Compuware
EMC Corp. rose $1.85 to $24.38. Third-quarter profit climbed 74 percent to $492.9 million, or 23 cents a share. Sales climbed 17 percent to $3.3 billion, also beating the average estimate of analysts in a Bloomberg survey.
Compuware Corp. climbed $1.11 to $9.92. The supplier of business software for companies including Best Buy Co. reported third-quarter earnings per share of 13 cents yesterday, above the average estimate of 9 cents among three analysts surveyed by Bloomberg.
VMware Inc. jumped $11.31 to a record $114.83. The software maker that had an initial public offering in August reported profit higher than analysts' estimates on demand for products that makes computers more efficient.
Express Scripts Inc. gained $4.55 to $61.92. The third- largest U.S. manager of drug benefits said profit rose 25 percent on sales of higher-profit generic medicines. Earnings excluding some items beat analysts' estimates. |
