US stocks fall on mortgage worries

[Pastor Dale Morgan]

*Perilous Times

US stocks fall on mortgage worries*

From correspondents in New York

November 20, 2007 07:33am
Article from: Reuters

US stocks fell overnight, after a brokerage downgrade of Citigroup
sparked concerns that there may be more mortgage losses to come, raising
doubts about the outlook for the economy.

Setting the tone for the session, Goldman Sachs recommended investors
sell the shares of Citigroup as the bank may have to write off $US15
billion ($16.9 billion) over the next two quarters as mortgage losses
reduce earnings.

Swiss Re, the world's biggest reinsurer, also fed concerns that there
may be more losses from the global credit crisis with its announcement
of a $US1.07 billion write-down.

"It's dreadful. There's been aftershock after aftershock from the credit
crisis," said Brian Gendreau, investment strategist at ING Investment
Management in New York.

"And today, a major bank downgrading another major financial institution
to 'sell' --that's unusual."

The Dow Jones industrial average was down 152.18 points, or 1.16 per
cent, at 13,024.61.

The Standard & Poor's 500 Index was down 16.64 points, or 1.14 per cent,
at 1442.10.

The Nasdaq Composite Index was down 26.92 points, or 1.02 per cent, at
2610.32.

Investors had to contend with more disappointing news on the housing front.

The Dow Jones US Home Construction Index marked its steepest drop in two
months after an industry group said US home builder sentiment stayed at
a record low in November.

The National Association of Home Builders said potential buyers
canceling orders or facing higher hurdles getting mortgages from lenders
kept builders inundated with unsold houses.

In addition, Lowe's, the No. 2 US home improvement chain, slashed its
full-year profit outlook, while a Credit Suisse said Freddie Mac, the
No. 2 US home funding source, may suffer between $US1 billion and $US5
billion of losses on risky subprime mortgages.

Shares of Lowe's slid 7.2 per cent to $23.20, while shares of Freddie
Mac fell 7 per cent to $37.98.

In the bond market, prices rose and yields dropped to two-year lows as
investors bought Treasuries in a safe-haven move away from stocks.

The benchmark 10-year note shot up 24/32 in price, pushing its yield
down to 4.08 per cent.

Citigroup shares fell 4.7 per cent to $32.41 on the New York Stock
Exchange, while shares of Bank of America, the No. 2 US bank, declined 2
per cent to $43.46.

The S&P financial index slid 1.9 per cent.

On the Nasdaq, shares of Apple were among those leading decliners,
slipping 0.3 per cent to $165.89.

Technology stocks have been hit by concerns that the credit crisis may
hurt technology spending.

But even as a broad swath of the market sold off, shares of companies
seen likely to withstand an economic slowdown headed higher.

Shares of Altria Group, parent of cigarette maker Philip Morris, jumped
1.41 per cent to $74.23.

Earlier Altria hit an all-time high of $74.35. McDonald's, the world's
largest fast-food chain, climbed 1 per cent to $58.72.