U.S. Stocks Drop

U.S. stocks fell, wiping out last week’s gains, after manufacturing showed a worsening economy that analysts said will hurt earnings at companies from JPMorgan Chase & Co. to Apple Inc.

JPMorgan tumbled 7.5 percent on Merrill Lynch & Co.’s prediction that the biggest U.S. bank by assets may post a quarterly loss, while Apple slid 3.6 percent after the maker of iPods was downgraded to neutral” at Goldman Sachs Group Inc. Ingersoll-Rand Co. and Textron Inc. lost more than 3.1 percent as industrial production decreased for the third time in four months and the New York Federal Reserve’s regional economic index contracted the most on record.

The Standard & Poor’s 500 Index slipped 1.3 percent to 868.59 as financial and technology shares were the biggest drag on the gauge. The Dow Jones Industrial Average declined 65.15 points, or 0.8 percent, to 8,564.53. The Russell 2000 Index of small U.S. companies decreased 3.4 percent.

European stocks declined for a third straight day as speculation that banks will post more losses and a contraction in U.S. manufacturing overshadowed a rally in energy companies.

BNP Paribas SA sank 10 percent after a Belgian court froze the lender’s plans to buy Fortis assets and the bank said it has as much as 350 million euros ($474 million) at risk from investments with Bernard Madoff. Natixis SA and HSBC Holdings Plc also dropped after disclosing investments with Madoff, whose New York-based money-management firm collapsed last week. Technip SA and StatoilHydro ASA jumped more than 5 percent as crude oil touched $50 a barrel.

The Dow Jones Stoxx 600 Index slipped 0.4 percent to 197.51 after earlier advancing as much as 1.6 percent. The gauge is down 46 percent in 2008 as almost $1 trillion in bank losses and writedowns froze credit markets and the U.S., Europe and Japan entered the first simultaneous recessions since World War II.

National benchmark indexes retreated in 12 of the 18 western European markets today. The U.K.’s FTSE 100 lost 0.1 percent, while Germany’s DAX slipped 0.2 percent. France’s CAC declined 0.9 percent.

TradingEconomics.com, Bloomberg
12/15/2008 1:16:44 PM