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US stocks drop for second day, Dow, S&P 500 fall to 2007 low

US stocks drop for second day, Dow, S&P 500 fall to 2007 low
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First Published: Wed, Mar 14 2007. 10 34 PM IST
Updated: Wed, Mar 14 2007. 10 34 PM IST
New York: US stocks retreated, sending the Standard & Poor’s 500 Index and Dow Jones Industrial Average to the lowest this year, after General Motors Corp stoked concern that mortgage defaults will spread from the riskiest borrowers to Americans with better credit.
GM, the world’s largest automaker, dropped as subprime loan losses at its GMAC finance unit caused operating earnings to miss analysts’ estimates. It sent the Dow average below 12,000 for the first time since October and spurred losses in shares of banks and other lenders.
“There is a potential here for the difficulties we’re experiencing in housing — particularly the mortgage market and specifically in the subprime mortgage market — to create a significant contagion in the financial world,” said Michael Vogelzang, who helps manage more than $2 billion (Rs.200 crores as chief investment officer of Boston Advisors LLC in Boston. “That’s why we’ve seen financial stocks suffer the most in this recent downdraft.”
Stocks in Europe and Asia tumbled as concern deepened that rising US home-loan delinquencies will curtail expansion in the world’s biggest economy.
The S&P 500 fell 9.19, or 0.7%, to 1368.76 at 12:30 p.m. New York time, erasing a weeklong rebound from the steepest rout in four years. The Dow average lost 91.57, or 0.8%, to 11,984.39. The Nasdaq Composite Index decreased 13.93, or 0.6%, to 2336.64.
Stocks on 13 March wiped out three days of gains after mortgage delinquencies rose to a four-year high and retail sales growth slowed, fueling concern a home-loan crisis is spreading across the economy.
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First Published: Wed, Mar 14 2007. 10 34 PM IST