Global stocks fall as oil prices retreat
NEW YORK (Reuters) - Worries about credit problems and the health of U.S. economy pressured U.S. stocks on Monday and triggered a pullback in oil prices from record highs.
Crude fell below $87 a barrel on Monday. The dollar rebounded from earlier record lows but Treasuries slipped on profit-taking in the wake of last week's rally.
Credit troubles and a worsening economic outlook remained on investors's minds after Lehman Brothers Inc downgraded companies in the mortgage finance sector, hurting such stocks as Countrywide Financial Corp CFC.N.
Lehman analyst Bruce Harting said it was only a matter of time before home mortgage payment problems spread to credit cards, auto loans and other types of consumer debt.
The Dow Jones industrial average .DJI was down 59.01 points, or 0.43 percent, at 13,463.01. On Friday the Dow industrials lost 366 points on the 20th anniversary of the 1987 market crash.
"Our economy is slowing down, and I don't think we're going to be able to make it all up (in profits) overseas. So I think we have a little bit more downside," said Victor Pugliese, director of listed equity trading at First Albany Corp. in San Francisco.
A drop in oil prices weighed on shares of energy companies including Exxon Mobil Corp. (XOM.N). U.S. light sweet crude oil fell $1.82 to $86.78 per barrel, retreating further from the $90.07 all-time high hit on Friday.
The Standard & Poor's 500 Index .SPX was down 3.91 points, or 0.26 percent, at 1,496.72. But the Nasdaq Composite Index .IXIC was up 6.60 points, or 0.24 percent, at 2,731.76.
Gains in Apple Inc (AAPL.O) before the release of its earnings scheduled after the closing bell allowed Nasdaq to outperform other U.S. stock indexes.
In Europe, the FTSEurofirst 300 .FTEU3 index of top European shares was down 1.3 percent, while Japan's Nikkei .N225 average ended at a four-week closing low.
DOLLAR REBOUNDS
The dollar rebounded from a fresh low on Monday as traders pared back bets against the currency after the weekend's Group of Seven meeting yielded no call to action on the falling greenback.
Having hit record lows against the euro and a basket of major currencies earlier on Monday, the dollar bounced back with investors now betting its decline may have gone too far, too fast.
The greenback chalked up gains of over 1 percent against the Canadian and New Zealand dollars, and was up against a basket of major trading-partner currencies.
The U.S. Dollar Index .DXY jumped 1.23 percent at 78.139 from a previous session close of 77.590.
The euro EUR= was down 1.11 percent at $1.4145 from a previous session close of $1.4202. Against the Japanese yen, the dollar was down 0.39 percent at 114.05 from a previous session close of 116.57.
Treasuries succumbed to profit-taking following last week's massive rally, which was based on growing expectations that a softening economy will force the Federal Reserve to cut interest rates again at the end of this month.
The benchmark 10-year U.S. Treasury note was down 5/32, with the yield at 4.4147 percent. The two-year U.S. Treasury note was down 3/32, with the yield at 3.85 percent. The 30-year U.S. Treasury bond was down 3/32, with the yield at 4.70 percent.
(Additional reporting by Jeremy Gaunt, Santosh Menon and Jamie McGeever in London and Burton Frierson, Caroline Valetkevitch and Nick Olivari in New York)
