U.S. Stocks Fall, Led by Financials; Countrywide,
Exxon Drop
By Michael Patterson
Aug. 27 (Bloomberg) -- U.S. stocks declined after
Lehman Brothers Holdings Inc. analysts reduced their
earnings estimates for Countrywide Financial Corp. and
traders pare bets that the Federal Reserve will lower
its benchmark lending rate.
Financial stocks were the biggest drag on the Standard
& Poor's 500 Index after Lehman cited ``extraordinary
weakness'' in the secondary market for loans held by
Countrywide, the biggest U.S. mortgage lender. Exxon
Mobil Corp., the world's largest oil producer, led
energy shares lower as fuel prices retreated.
The S&P 500 lost 11.19, or 0.8 percent, to 1,468.18 as
of 11:25 a.m. in New York. The Dow Jones Industrial
Average slipped 59.5, or 0.4 percent, to 13,319.37.
The Nasdaq Composite Index fell 18.08, or 0.7 percent,
to 2,558.61.
The S&P 500 has dropped 5.4 percent from a July 19
record amid concern defaults on mortgages will hurt
earnings at lenders and slow the world's largest
economy.
``There's a lot of nervousness about anything to do
with credit markets, and the mortgage market is
certainly at the forefront,'' said Michael James,
senior equity trader at Wedbush Morgan Securities in
Los Angeles.
U.S. stocks posted their biggest advance in five
months last week and expectations of share volatility
had their steepest weekly decline since at least 1990,
helped by speculation the Fed will take steps to stem
losses in credit markets.
Fed futures contracts today showed traders see a 28
percent chance the Fed will lower its target for
overnight bank lending to 4.75 percent from 5.25
percent at its next meeting on Sept. 18, down from 42
percent odds on Aug. 24.
Countrywide Drops
Countrywide declined $1.11, or 5.3 percent, to $19.89
for the biggest slide in the S&P 500. Lehman analysts
led by Bruce Harting reduced their 2007
earnings-per-share estimate to $1 from $2.80,
according to a research note today. They lowered their
2008 estimate to $1.55 from $3.
Separately, Piper Jaffray & Co. downgraded Countrywide
shares to ``market perform'' from ``outperform.''
Bank of America Corp., which last week bought $2
billion of preferred stock in Countrywide, slipped 65
cents to $51.22. Lehman, the biggest underwriter of
U.S. bonds backed by mortgages, dropped $1.67 to
$58.70.
Financial shares in the S&P 500 fell 0.7 percent as a
group.
A gauge of energy shares in the S&P 500 dropped 1.2
percent after prices for crude oil, natural gas and
gasoline fell in New York. Exxon declined 79 cents to
$84.90. ConocoPhillips, the third-largest U.S.
producer, lost 25 cents to $80.49.
In economic data today, sales of previously owned
homes in the U.S. declined 0.2 percent, less than
forecast, to an annual rate of 5.75 million, from 5.76
million in June, the National Association of Realtors
said today in Washington. That was the slowest pace
since November 2002. Sales dropped 9 percent compared
with a year earlier.
To contact the reporter on this story: Michael
Patterson in New York at [EMAIL PROTECTED] .
Last Updated: August 27, 2007 11:27 EDT
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