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Stocks Close Lower On More Credit Worries
By CNBC.com With Wires | 15 Nov 2007 | 06:08 PM ET
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Stocks closed sharply lower as investors remained skittish about the housing slump's toll on the economy and potential credit losses at big financial services companies.

Up until the last hour of trading, major indexes had been stuck in a narrow range, erratically seesawing from negative to little changed for much of the session.

But losses quickly mounted heading toward the close as shares of financial services companies extended their declines.

Shares of Citigroup [C  Loading...      ()   ], the No. 1 U.S. bank, dropped more than 4 percent, while those of Bank of America [BAC  Loading...      ()   ], the No. 2 U.S. bank, declined more than 3 percent.

Major U.S. Indexes
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"Too Much Fear"

"There's just too much fear in the financials," said John O'Brien, senior vice president at MKM Partners LLC in Cleveland, Ohio. "The fear is back again that the write-downs are kind of a
mystery and no one really knows what the bottom is or what the outcome is going to be."

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Energy shares, including ExxonMobil [XOM  Loading...      ()   ], also weighed on the broader market as they dropped in sync with crude oil prices.

On the Nasdaq, investors again sold shares of the tech sector's recent darlings, including BlackBerry maker Research in Motion [RIMM  Loading...      ()   ].
Richard Drew / AP

Shares of American International Group [AIG  Loading...      ()   ] led the Dow's biggest decliners after a brokerage cut its price target on the insurer's stock, citing the impact of the credit turmoil.

Chief Executive John Stumpf of Wells Fargo [WFC  Loading...      ()   ], the No. 2 U.S. mortgage lender, said at a conference that the U.S. housing downturn was far from over and was the worst since the Great Depression.

Shares of Fannie Mae [FNM  Loading...      ()   ], the largest U.S. home funding source, tumbled 9.4 percent while shares of Freddie Mac [FRE  Loading...      ()   ], the No. 2 U.S. home funding company, shed 4.4.

Worries About Retailers


JC Penney [JCP  Loading...      ()   ] dimmed hopes that holiday shopping would be strong as it reported a 9 percent drop in quarterly profit and said its sales weakened "dramatically" in September and October.
Richard Drew / AP
Photo/Richard Drew)

Barclays [BCS  Loading...      ()   ], Britain's third-largest bank, checked in with a $2.7 billion writedown between July and October that was actually less than expected. But while shares initially jumped more than 6 percent after the update, the stock slipped as analysts said BarCap's growth this year and next will be restricted, and that market conditions remain unpredictable.

Dow component General Electric [GE  Loading...      ()   ] became the latest casualty of the credit turmoil. A $5 billion short-term bond fund run by GE's asset management unit is offering investors an option to redeem their holdings at 96 cents on the dollar.

In a Nov. 8 e-mail to institutional investors, GE Asset Management said "extreme conditions in the credit markets" are forcing the fund to sell securities at a loss.

NovaStar Financial [NFI  Loading...      ()   ] shares sank by roughly half after the company, which has halted subprime mortgage lending, posted a big quarterly loss and said bankruptcy is possible. Shares are expected to be delisted on the New York Stock Exchange in the next several weeks.

Earnings News

In earnings news, Applied Materials [AMAT  Loading...      ()   ], the largest supplier of tools for making microchips, gave a profit forecast far below Wall Street expectations, stirring concerns about holiday-season sales and sending its shares briefly down, before rallying on the belief that company's overall fundamentals were still strong.

Tyco International [TYC  Loading...      ()   ] reported sharply lower quarterly net profit, but earnings and sales from continuing businesses topped Wall Street forecasts, while Upscale home furnishings retailer Williams-Sonoma [WSM  Loading...      ()   ] posted lower quarterly profit, but beat analysts' expectations.

Elsewhere, Ralcorp Holdings