(Updates to midday)
By Ellis Mnyandu
NEW YORK, Nov 7 (Reuters) - U.S. stocks tumbled on
Wednesday as a combination of oil near $100, a slide in the
dollar and fear of more credit market turmoil heightened worry
about prospects for the economy and profits.
Financial services companies were among the biggest
decliners as investors heard more gloomy forecasts for housing
and worried about additional losses tied to the subprime
mortgage crisis.
Washington Mutual Inc <WM.N>, the largest U.S. savings and
loan company, said the housing slump will persist through 2008,
loan losses will rise and mortgage lending will fall to an
eight-year low. For details, see [ID:nN07494198]
Before trading began, General Motors Corp <GM.N> reported
its biggest ever quarterly loss. Shares of the largest U.S.
automaker were down more than 3 percent.
"I think oil could hit $100 as early as tomorrow. There's a
lot of fear in terms of the weaker dollar and there are
subprime concerns," said Ernest Csak, vice president at Knight
Equity Markets in Jersey City, New Jersey.
"When you see $100 oil, I think the consumer is going to
overreact and cut back."
The Dow Jones industrial average <.DJI> was down 159.24
points, or 1.17 percent, at 13,501.70. The Standard & Poor's
500 Index <.SPX> was down 19.14 points, or 1.26 percent, at
1,501.13. The Nasdaq Composite Index <.IXIC> was down 32.36
points, or 1.15 percent, at 2,792.82.
U.S. crude for December edged up 51 cents to $97.24 a
barrel on the New York Mercantile Exchange after hitting a
record of $98.62 before the market open.
As higher energy costs threatened to squeeze spending by
consumers, investors unloaded shares of major retailers and
some manufacturers, such as 3M Co <MMM.N>.
The dollar fell to a record low against the euro after
China signaled it may want to diversify more the currencies in
its $1 trillion-plus foreign reserves.
Investment bank Morgan Stanley <MS.N> dropped 4.2 percent
to $52.21, while Washington Mutual slid more than 9 percent to
$22. For WaMu it was the biggest decline since September 2001.
Shares of homebuilders also tumbled, with the Dow Jones
home construction index down 2.3 percent.
American Express Co <AXP.N> fell 2.8 percent to $56.92 and
was the top drag on the Dow. The S&P financial index <.GSPF>
fell 2.6 percent.
American International Group Inc <AIG.N>, the world's
largest insurer, dropped 3.1 percent to $60.09 before its
earnings report due after the market's close.
GM shares fell 3.9 percent to $34.76, while shares of 3M
slipped 1.3 percent to $84.35.
Among retailers, home improvement chain Lowe's Cos Inc
<LOW.N> dropped 1.6 percent to $24.34 on the NYSE.
On the Nasdaq, shares of Microsoft Corp <MSFT.O> dropped
1.3 percent to $35.94, adding to losses triggered on Tuesday by
brokerage Goldman Sachs when it dropped the software maker from
its buy list.
(Editing by Kenneth Barry)
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Keywords: MARKETS STOCKS