U.S. Stocks Fall

U.S. stocks fell and the Standard & Poor’s 500 Index retreated from a five-week high on concern the Federal Reserve has few tools left to combat the recession after cutting its benchmark interest rate to as low as zero.

Morgan Stanley lost 4.8 percent after its $2.2 billion fourth-quarter loss was worse than analysts estimated as investment-banking fees dwindled. Citigroup Inc. and JPMorgan Chase & Co. declined more than 2 percent. Apple Inc. slid 6 percent after the maker of the iPhone said Chief Executive Officer Steve Jobs won’t speak at the Macworld Expo, spurring concern that the leader’s health is deteriorating.

The S&P 500 lost 0.8 percent to 906.36 at 9:49 a.m. in New York. The Dow Jones Industrial Average slipped 60.05 points, or 0.7 percent, to 8,864.09. The Russell 2000 Index of small U.S. companies retreated 0.3 percent.

European stocks declined as concern that bank earnings may deteriorate further overshadowed a rally in construction and materials companies following the Federal Reserve’s interest-rate cut.

BNP Paribas SA slumped 17 percent after saying it lost 710 million euros ($1 billion) before tax in the first 11 months of the year at its securities unit. Deutsche Bank AG sank 7.5 percent as it delayed the redemption of 1 billion euros of bonds. CRH Plc, the world’s second-biggest building-materials maker, and Skanska AB rallied at least 3 percent.

The Dow Jones Stoxx 600 Index slipped 0.7 percent to 197.54 at 2:47 p.m. in London. The measure is down 46 percent this year as credit losses and writedowns at the world’s largest banks surpassed $1 trillion and the U.S., Europe and Japan entered the first simultaneous recessions since World War II.

National benchmark indexes fell in 12 of the 18 western European markets. The U.K.’s FTSE 100 added 0.2 percent, Germany’s DAX retreated 0.3 percent, and France’s CAC 40 advanced 0.1 percent.

Asian stocks rose to a five-week high after the U.S. Federal Reserve and Hong Kong cut interest rates to a record low, spurring gains among developers and lenders on speculation the region’s central banks will follow.

The MSCI Asia Pacific Index added 2.7 percent to 89.82 as of 7:22 p.m. in Tokyo, its highest close since Nov. 10. The gauge has rallied 19 percent since reaching a five-year low four weeks ago as governments from the U.S. to Australia took steps to buttress their economies from the worst financial crisis since the Great Depression.

Japan’s Nikkei 225 Stock Average gained 0.5 percent to 8,612.52. Hong Kong’s Hang Seng Index added 2.2 percent, led by a 4.2 percent advance in China Unicom (Hong Kong) Ltd. after the nation’s second-biggest mobile-phone carrier agreed to buy telecommunication assets from its parent.

TradingEconomics.com, Bloomberg
12/17/2008 7:03:18 AM