Stocks Tumble on Bleak Housing Outlook
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American stocks fell and the Dow Jones Industrial Average lost more than 200 points for the second time in three days after the International Monetary Fund said there is no end in sight to the housing slump.
Merrill Lynch & Co., American International Group Inc., and Fannie Mae led financial shares to a third straight drop as the IMF warned that worsening credit conditions may prolong the economic slowdown. Verizon Communications Inc., the second-largest American phone company, slid to an almost two-year low on a bigger-than-estimated decrease in home-phone lines. Tyson Foods Inc., the second-largest American chicken producer, tumbled the most in six weeks after profit sank 92% on higher feed costs.
The Standard & Poor’s 500 Index retreated 23.39 points, or 1.9%, to 1,234.37, its lowest level since reaching an almost three-year low on July 15. The Dow lost 239.61, or 2.1%, to 11,131.08. The Nasdaq Composite Index slipped 46.31, or 2%, to 2,264.22. Four stocks fell for each that rose on the New York Stock Exchange.
“We’re relatively bearish on financials because even when we get this crisis sorted out, the rebound is going to be muted,” the chief investment officer of 1st Source Corp. Investment Advisors in South Bend, Indiana, Ralph Shive, said. “Everyone wants to declare the crisis over, but it’s going to take a long time to dig out of this hole.”
