Market sinks as AT&T stirs recession fear
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NEW YORK (Reuters) - U.S. stocks tumbled on Tuesday after a warning by phone company AT&T of soft consumer spending sparked a new round of recession fears, helping drive the S&P to its worst-ever five-day start to a year.
In addition, Countrywide Financial was down 238.42 points, or 1.86 percent, at 12,589.07. The Standard & Poor's 500 Index was down 25.99 points, or 1.84 percent, at 1,390.19. The Nasdaq Composite Index was down 58.95 points, or 2.36 percent, at 2,440.51.
Tuesday's loss brings the S&P's five-day percentage decline to 5.32 percent, making it the worst calendar debut ever for the benchmark index.
In the same five-day period the Dow industrials posted a 675.75 point decline --their worst ever start to a year in point terms, and the worst percentage decline since the first five sessions of 1978, according to Dow Jones Indexes.
AT&T shares fell 4.8 percent to $39.07.
Other mortgage-related stocks followed Countrywide's drop. Mortgage bond insurer AMBAC Financial Group Inc lost 17.3 percent to $19.42 and rival MBIA Inc sank 20.8 percent to $13.85.
Airline stocks, sensitive both to rising oil prices and signs of economic slowdown, were hammered. The American Stock Exchange index of airlines dropped 8 percent. Among the biggest losers were United Airline parent UAL Corp, down 16.4 percent to $24.39 and Continental Airlines Inc, down 12.4 percent at $17.82.
Crude oil futures settled $1.31 higher at $96.40 a barrel.
In a sign that investors are bracing for recession, the market's rare gainers were defensive issues seen as resistant to economic contraction.
"Everybody is gravitating towards safety stocks, like the drug makers," Rahman said.
Blue-chip drug makers were big gainers. Merck & Co rose 2.9 percent to $59.58 and Pfizer Inc rose 1 percent to $23.46.
(Additional reporting by Kristina Cooke; Editing by Leslie Adler)
