Wachovia slid to the lowest level since 1995 after saying Kennedy Thompson will step down, reigniting concern that subprime losses will deepen. Morgan Stanley, Merrill Lynch & Co. and Lehman Brothers Holdings Inc. led all 29 companies in the S&P 500 Diversified Financials Index lower after S&P said the firms will be forced to post more writedowns. Marriott International Inc. spurred declines in consumer shares as the largest hotel chain said lower U.S. demand is hurting sales growth.
The S&P 500 Index lost 17.42, or 1.2 percent, to 1,382.96 at 2:12 p.m. in New York. The Dow Jones Industrial Average declined 167.48, or 1.3 percent, to 12,470.84. The Nasdaq Composite Index retreated 39.38, or 1.6 percent, to 2,483.28. Four stocks dropped for each that rose on the New York Stock Exchange.
Banks and brokerages started their retreat today after U.K. lender Bradford & Bingley Plc warned that the housing market is deteriorating in Great Britain and Treasury Secretary Henry Paulson predicted that it will take ``months'' before financial- market turmoil ends. Financial shares have led the S&P 500's 12 percent decline from a record in October as writedowns and credit losses stemming from the subprime-mortgage market's collapse approach $400 billion worldwide.
The Institute for Supply Management's factory index rose to 49.6 from 48.6 in April, the Tempe-Arizona-based group said today. Fifty is the dividing line between contraction and expansion. Economists forecast the index would decrease to 48.5 from 48.6 in April, according to the median of 75 projections in a Bloomberg News survey.