Saguaro
11-05-2007, 12:19 PM
NEW YORK (CNNMoney.com) -- Stocks fell on Monday after Citigroup raised another warning flag for the financial sector, but pared losses after a reading on the service economy came in stronger than expected.
The Dow Jones industrial index (Charts) fell about 0.3 percent more than 2-1/2 hours into the session. The broader S&P 500 index (Charts) and the tech-fueled Nasdaq (Charts) both lost about 0.4 percent.
Citi said it would write down an additional $8 to $11 billion due to the decline in value of subprime-related assets. The bank also announced the departure of CEO and Chairman Charles Prince.
The news dragged on the financial sector stocks, as investors worried additional losses could follow from other banks and brokerages.
"The immediate catalyst was Citigroup but the broader issue is it looks like you are getting another wave of asset writedowns," James Awad, chairman of WP Stewart Asset Management, said.
After Prince, more problems for Citi
"The fear is if financial institutions go through another period of stress, it could create another seize up in the credit markets," he added.
On the economic front, a reading on the service sector of the economy came in above expectations. The Institute for Supply Management's index for measuring the health of non-manufacturing industries rose to 55.8, up from 54.8 in September and above analysts' estimates for a reading of 54. A reading above 50 indicates expansion in the sector.
What's moving
Citigroup (Charts, Fortune 500), a Dow component, fell about 5 percent. Other financial stocks, including Merrill Lynch (Charts, Fortune 500), Goldman Sachs (Charts, Fortune 500) and Morgan Stanley (Charts, Fortune 500), also stumbled.
Internet conglomerate IAC (Charts, Fortune 500), which owns firms including the Home Shopping Network, Ticketmaster and search engine Ask.com, surged 9 percent after it said it would split into five separately traded public companies.
Time Warner (Charts, Fortune 500) shares rose nearly 3 percent amid speculation that CEO Dick Parsons would announce his departure from the media conglomerate on Monday. CNNMoney.com is a unit of Time Warner.
Ford Motor (Charts, Fortune 500) said over the weekend it reached a tentative 4-year labor contract with the United Autoworkers Union, avoiding the threat of a strike.
Shares of WellCare (Charts) soared 40 percent Monday after the health insurance company said it would delay its quarterly results pending an investigation into a raid by state and federal authorities, although the company said it expected to report a 67 percent jump in profits.
In deal news, real estate investment trust Gramercy Capital agreed to buy American Financial Realty Trust for about $3.4 billion in cash and stock. Gramercy Capital (Charts) shares fell 2 percent, while American Financial (Charts) surged 23 percent.
Market breadth was negative. Losers beat winners by 3 to 1 on the New York Stock Exchange on volume of 563 million shares. Decliners beat advancers by nearly 2 to 1 on the Nasdaq as 836 million shares traded hands.
Oil prices backed away from record highs amid easing tensions between Turkey and Kurdish rebels based in Iraq. Light, sweet crude for December fell $1.03 to $94.90 a barrel on the New York Mercantile Exchange.
Gold prices retreated after climbing to their highest level in nearly 28 years Friday, as COMEX gold for December fell 50 cents to $808 an ounce.
Treasury prices edged higher, bringing the yield on the benchmark 10-year note to 4.31 percent.
The dollar gained versus the euro and retreated against the yen.
In global trade, Asian stocks retreated, reflecting some of the credit concerns raised by the Citigroup news. European stocks were lower in afternoon trading.
http://money.cnn.com/2007/11/05/markets/markets_1130/index.htm?postversion=2007110511
The Dow Jones industrial index (Charts) fell about 0.3 percent more than 2-1/2 hours into the session. The broader S&P 500 index (Charts) and the tech-fueled Nasdaq (Charts) both lost about 0.4 percent.
Citi said it would write down an additional $8 to $11 billion due to the decline in value of subprime-related assets. The bank also announced the departure of CEO and Chairman Charles Prince.
The news dragged on the financial sector stocks, as investors worried additional losses could follow from other banks and brokerages.
"The immediate catalyst was Citigroup but the broader issue is it looks like you are getting another wave of asset writedowns," James Awad, chairman of WP Stewart Asset Management, said.
After Prince, more problems for Citi
"The fear is if financial institutions go through another period of stress, it could create another seize up in the credit markets," he added.
On the economic front, a reading on the service sector of the economy came in above expectations. The Institute for Supply Management's index for measuring the health of non-manufacturing industries rose to 55.8, up from 54.8 in September and above analysts' estimates for a reading of 54. A reading above 50 indicates expansion in the sector.
What's moving
Citigroup (Charts, Fortune 500), a Dow component, fell about 5 percent. Other financial stocks, including Merrill Lynch (Charts, Fortune 500), Goldman Sachs (Charts, Fortune 500) and Morgan Stanley (Charts, Fortune 500), also stumbled.
Internet conglomerate IAC (Charts, Fortune 500), which owns firms including the Home Shopping Network, Ticketmaster and search engine Ask.com, surged 9 percent after it said it would split into five separately traded public companies.
Time Warner (Charts, Fortune 500) shares rose nearly 3 percent amid speculation that CEO Dick Parsons would announce his departure from the media conglomerate on Monday. CNNMoney.com is a unit of Time Warner.
Ford Motor (Charts, Fortune 500) said over the weekend it reached a tentative 4-year labor contract with the United Autoworkers Union, avoiding the threat of a strike.
Shares of WellCare (Charts) soared 40 percent Monday after the health insurance company said it would delay its quarterly results pending an investigation into a raid by state and federal authorities, although the company said it expected to report a 67 percent jump in profits.
In deal news, real estate investment trust Gramercy Capital agreed to buy American Financial Realty Trust for about $3.4 billion in cash and stock. Gramercy Capital (Charts) shares fell 2 percent, while American Financial (Charts) surged 23 percent.
Market breadth was negative. Losers beat winners by 3 to 1 on the New York Stock Exchange on volume of 563 million shares. Decliners beat advancers by nearly 2 to 1 on the Nasdaq as 836 million shares traded hands.
Oil prices backed away from record highs amid easing tensions between Turkey and Kurdish rebels based in Iraq. Light, sweet crude for December fell $1.03 to $94.90 a barrel on the New York Mercantile Exchange.
Gold prices retreated after climbing to their highest level in nearly 28 years Friday, as COMEX gold for December fell 50 cents to $808 an ounce.
Treasury prices edged higher, bringing the yield on the benchmark 10-year note to 4.31 percent.
The dollar gained versus the euro and retreated against the yen.
In global trade, Asian stocks retreated, reflecting some of the credit concerns raised by the Citigroup news. European stocks were lower in afternoon trading.
http://money.cnn.com/2007/11/05/markets/markets_1130/index.htm?postversion=2007110511