U.S. Stocks Drop on Bank Downgrades

U.S. stocks declined, paring the biggest weekly gain in five years, after analysts advised selling banks and other lenders as the U.S. economy slows.
TradingEconomics.com, Financial Times 2/4/2008 7:40:28 AM

The Standard & Poor's 500 Index fell 9.68, or 0.7 percent, to 1,385.74 as of 10:23 a.m. in New York after rallying 4.9 percent last week. The Dow Jones Industrial Average, the best- performing benchmark among indexes in the 20 biggest markets last month, decreased 65.72, or 0.5 percent, to 12,677.27. The Nasdaq Composite Index retreated 9.15, or 0.4 percent, to 2,404.21. About five stocks declined for every two that advanced on the New York Stock Exchange.

The losses came as stocks in Europe and Asia advanced, helped by takeover speculation. The Dow Jones Stoxx 600 Index of European shares rose 0.1 percent after U.K. pub owner Mitchells & Butlers Plc received a merger proposal and Fortescue Metals Group Ltd. said it held talks with ``strategic'' investors.

The decline in the S&P 500 followed the index's best weekly gain since 2003. The Federal Reserve's second interest-rate cut in two weeks, Microsoft Corp.'s $44.6 billion bid for Yahoo! Inc. and a plan to rescue bond insurers lifted equities.

The S&P 500 climbed 4.9 percent last week, trimming its yearly loss to 5 percent. The Dow average has fallen 3.9 percent and the Nasdaq dropped 9 percent in 2008.

Job cuts announced by U.S. employers jumped 19 percent in January from a year earlier as businesses attempted to rein in costs, according to a report by a private placement firm.

Companies may trim their workforce further as the worst housing slump in a quarter century threatens to push the economy into a recession, economists said. The report followed government figures last week that showed the U.S. lost jobs in January for the first time in more than four years.

U.S. Stocks Drop on Bank Downgrades