WORLD / America |
US stocks plummet on subprime lender woes(AP)Updated: 2007-03-14 08:39
"The fear index is rising," said Steven Cochrane, senior managing director for Moody's Economy.com. "(Subprime mortgages) are our No. 1 concern right now."
Investors trying to gauge how far problems in the subprime sector have spread pounced on comments from Goldman Sachs Group Inc. The investment bank said that while the subprime sector showed "significant weakness," the broader credit environment "remained strong." Goldman Sachs fell $3.57 to $199.03, despite record first-quarter profit thanks to strong revenue from trading and investment banking. Government data on Tuesday suggested that consumer spending might be getting crimped. The Commerce Department said sales at US retailers rose 0.1 percent in February as wintry weather in much of the country kept shoppers away from stores. Investors had expected an increase of 0.3 percent from January. "I think a big question mark on this is how much of this is weather-related," said Rob Lutts, chief investment officer at Cabot Money Management. "We had two or three days during the month which knocked out activity. ... I think it is causing a little bit of alarm short-term." Several retailers stumbled following the Commerce Department's report. Federated Department Stores Inc., parent of Macy's and Bloomingdale's, fell 85 cents to $44.09; Wal-Mart Stores Inc. slid $1.08, or 2.3 percent, to $46.18; and Target Corp. fell $1.76, or 2.8 percent, to $60.47. Traders now await the producer and consumer price indexes, scheduled to be released Thursday and Friday, respectively. The two inflation gauges should give investors a better idea of whether costs are escalating too fast, and if the Federal Reserve might give consumers some relief by lowering interest rates later in the year. Of the Dow's 30 blue chip stocks, the only gainer was AT&T Corp., which rose 20 cents to $37.26. The Russell 2000 index of smaller companies fell 19.88, or 2.52 percent, to 769.12. Overseas, Japan's Nikkei stock average fell 0.66 percent. Britain's FTSE 100 fell 1.16 percent, Germany's DAX index fell 1.36 percent, and France's CAC-40 fell 1.15 percent. Light, sweet crude fell 98 cents to settle at $57.93 per barrel on the New York Mercantile Exchange.
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