Stocks drop as credit concerns linger
Related Video
NEW YORK (Reuters) - Stocks fell on Monday, led by losses in financial companies, as worries about spillover from the subprime mortgage market lingered despite the Federal Reserve's surprise discount rate cut on Friday.
U.S. one-month Treasury bill yields dropped to their lowest since December 2004, while Thornburg Mortgage TMA.N Chief Operating Officer Larry Goldstone said there was a crisis in investor confidence in the mortgage sector.
The U.S. central bank's emergency move to stabilize credit markets followed sharp declines in world stock markets in recent weeks as problems in the risky U.S. subprime mortgage sector spread to other markets.
U.S. Treasury Secretary Henry Paulson is scheduled to meet with Federal Reserve Chairman Ben Bernanke and Senate Banking Committee Chairman Christopher Dodd to discuss the recent volatility in the financial markets, Dodd said.
"I think there was too much complacency coming into the market today," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles. "There's still a number of potential shoes that could drop" in the mortgage and credit markets.
The Dow Jones industrial average .DJI was down 51.62 points, or 0.39 percent, at 13,027.46. The Standard & Poor's 500 Index .SPX was down 11.04 points, or 0.76 percent, at 1,434.90. The Nasdaq Composite Index .IXIC was down 10.01 points, or 0.40 percent, at 2,495.02.
Shares of Thornburg dropped 10.2 percent to $13.50. JP Morgan Chase & Co. (JPM.N), down 3.8 percent at $45.61, and Citigroup Inc. (C.N), down 2 percent at $47.86, were among the top drags on the S&P 500 index.
A 2 percent drop in oil prices pushed down shares of energy companies, adding to the drop. Shares of Exxon Mobil Corp. (XOM.N) fell 1.4 percent to $82.98.
In other financial news, Countrywide Financial Corp. CFC.N fell 9 percent to $19.50 after the stock was downgraded by Keefe, Bruyette & Woods Inc.
Last week Countrywide, the largest U.S. mortgage lender, unexpectedly tapped an entire $11.5 billion credit line to help fund operations.
