Dow, S&P dip as credit concerns nag
NEW YORK (Reuters) - The Dow industrials and the S&P 500 declined slightly on Wednesday in light trading on concerns about more fallout from the housing slump.
Large-cap technology shares such as Intel Corp (INTC.O) helped lift the Nasdaq for the session. After the bell, Oracle Corp shares gained almost 4 percent after the business software maker's results showed quarterly revenues that exceeded Wall Street's estimates.
During the regular session, deteriorating mortgage debt resurfaced as an issue driving the market after Standard & Poor's warned it is more likely to cut credit ratings of Ambac Financial Group Inc (ABK.N) and MBIA Insurance Corp (MBI.N), two of the world's biggest insurers of bonds.
If these two companies are downgraded, the $1.2 trillion of debt they insure will fall in value.
Despite the blow to the market's overall confidence, downtrodden bank stocks rebounded on news that a Chinese sovereign wealth fund had bought a $5 billion stake in U.S. investment bank and brokerage Morgan Stanley (MS.N).
Morgan Stanley's shares rose 4.2 percent even after Morgan Stanley reported a quarterly loss driven by a larger-than-expected $9.4 billion of write-downs in mortgages and other assets.
"Investors are unsettled," said Sal Arnuk, co-manager of trading at Themis Trading in Chatham, New Jersey. "There just doesn't seem to be any end in sight for these credit problems. There are lots of intraday stock gyrations and no clear direction, and that's what keeps freaking people out."
The Dow Jones industrial average .DJI declined 25.20 points, or 0.19 percent, to end at 13,207.27. The Standard & Poor's 500 Index .SPX was down 1.98 points, or 0.14 percent, at 1,453.00. But the Nasdaq Composite Index .IXIC edged up 4.98 points, or 0.19 percent, to close at 2,601.01.
The renewed credit concerns offset earlier optimism sparked by the Federal Reserve reporting solid demand for a $20 billion auction that was part of a coordinated move by global central banks to thaw a freeze in money markets.
The energy sector provided a bright spot, in sync with a gain of more than $1 in U.S. crude oil futures prices. U.S. crude for January delivery gained $1.16 to settle at $91.24 a barrel.
An index of energy shares .OIX climbed 0.8 percent. Occidental Petroleum's (OXY.N) stock jumped 2.3 percent to close at $71.95 on the New York Stock Exchange.
But more signs of credit turmoil added to volatility and colored the day. Student lender SLM Corp (SLM.N), trying to bounce back from a $25 billion takeover deal gone sour, said it may face higher financing costs as a result of the credit crunch and noted that it would need to add capital. Shares of SLM, also known as Sallie Mae, plunged 20.7 percent to $22.89 and ranked among the biggest percentage losers on the NYSE.
Home builder Hovnanian Enterprises Inc (HOV.N) tumbled 11.4 percent to $7.44 after the company posted a wider-than-expected loss.
MBIA's shares slid 2.4 percent to $27.02 and AMBAC Financial's stock lost 1.8 percent to $27.46.
Union Pacific Corp's (UNP.N) shares fell 3.7 percent to $124.61 after the No. 1 U.S. railroad lowered its fourth-quarter earnings outlook due to rapidly rising fuel costs. Continued...
