Financials and energy shares weigh on Wall Street
NEW YORK (Reuters) - Stocks fell on Monday as shares of energy and commodity-related companies tumbled on falling oil and metals prices and investors worried the housing slump could fuel further losses at financial companies.
The drop in the price of oil and other commodities was partly on concern that a global slowdown would blunt demand. Exxon Mobil (XOM.N) shares dropped nearly 4 percent, while miner Freeport McMoran's (FCX.N) shares slid 12 percent.
The tone for the financial sector was set early in the session, after HSBC (HSBA.L) (HBC.N), Europe's biggest bank, reported a 28 percent drop in first-half profit as it took a $14 billion hit from bad debts on U.S. home loans and asset write-downs. Wachovia Corp WB.N fell almost 10 percent after a Wall Street analyst suggested investors unload shares of the fourth-largest U.S. bank.
U.S. economic data pointing to mounting inflation pressures added to the market's concerns, as did news that WCI Communities WCI.N , a major U.S. home builder, had filed for bankruptcy.
"Oil is down, but it's because global growth is slowing. The panacea that people thought a decline in oil would be has not come to pass," said Peter Boockvar, equity strategist at Miller, Tabak & Co in New York.
"Now the bear market is rolling on to energy, commodity and tech stocks," he said, referring to three sectors that on Monday were pulled lower by economic concerns.
The Dow Jones industrial average .DJI fell 42.17 points, or 0.37 percent, to 11,284.15. The Standard & Poor's 500 Index .SPX slid 11.30 points, or 0.90 percent, to 1,249.01, while the Nasdaq Composite Index .IXIC dropped 25.40 points, or 1.10 percent, to 2,285.56.
The S&P financial sub-index .GSPF fell 1.3 percent.
Among energy companies, Exxon Mobil (XOM.N) shares slid 3.9 percent to $76.60 and Chevron (CVX.N) dropped 1.8 percent to $82.80. Miner Freeport McMoran's shares fell 12.0 percent to $80.35.
Fertilizer stocks, such as Terra Industries (TRA.N) and Mosaic (MOS.N), also fell. Terra shares fell 14.8 percent to $45.94, while Mosaic's shares dropped 10.9 percent to
$109.29.
U.S. crude fell $3.69, or 2.95 percent, to settle at $121.41 a barrel after earlier slipping below $120. Copper futures hit a six-month low as all the industrial metals declined after rising inventories on the London Metal Exchange reinforced concerns that economic slowdown could dent demand. Gold dropped more than 1 percent.
"With crude oil and gold down, there seems to be a wave of selling in the commodity/fertilizer stocks. There is a general feeling that the worldwide economies are slowing," said William Lefkowitz, options strategist at brokerage firm vFinance Investments.
The Dow Jones home construction index .DJUSHB fell 1.7 percent to 272.40, after WCI Communities said it filed for Chapter 11 bankruptcy protection because it failed to obtain the financing that would keep $1.8 billion of debt out of default.
New York University economics professor Nouriel Roubini also fueled concerns about the slumping U.S. housing sector when he told financial weekly Barron's that the United States is in the early stages of a recession that will last for at least 18 months and will help cause hundreds of banks to fail. Continued...
