From combined dispatches
Stocks fell yesterday after crude oil prices rose and concern mounted that home loan defaults will accelerate, overshadowing the biggest day for takeovers since 2000. A General Motors executive said that overall auto sales have been hurt by problems in the housing market.
Wal-Mart Stores Inc. led the Dow Jones Industrial Average’s retreat from a record as higher fuel prices threatened to reduce consumer spending. Countrywide Financial Corp. pushed financial shares lower after the nation’s biggest mortgage lender said regulators may force more homeowners into foreclosures through tighter borrowing guidelines.
Stocks also declined after Moody’s Investors Service increased its loss estimates on subprime mortgages.
“We’re pretty cautious right now,” said Kevin Myeroff. “There’s too much exuberance at the moment. The market has gone a little higher than it should.”
The Dow posted its first drop in eight days, slipping 42.58, or 0.3 percent, to 12,919.40. The measure earlier climbed within 17 points of reaching 13,000 for the first time. The S&P 500 fell 3.42, or 0.2 percent, to 1480.93. The Nasdaq Composite Index decreased 2.72, or 0.1 percent, to 2523.67.
The Russell 2000 Index of smaller companies lost 0.2 percent to 827.55.
Announced takeovers yesterday totaled more than $130 billion worldwide, the most since Jan. 10, 2000, when America Online Inc. agreed to buy Time Warner Inc. for $186 billion.
About 10 stocks declined for every nine that advanced on the New York Stock Exchange, on light trading volume.
Crude oil gained 2.8 percent to $65.89 a barrel in New York on concern shipments from Nigeria may be disrupted the aftermath of the country’s presidential election.
Wal-Mart fell 83 cents to $48.93. Shares of Dow component General Motors fell 1.6 percent to $31.19 after Vice Chairman Bob Lutz said the crisis in the mortgage market has hurt U.S. auto sales this month, citing “reduced affordability.”
Banking regulators may exacerbate delinquencies among borrowers with questionable credit histories by making it tougher to refinance subprime mortgages, said Angelo Mozilo, chief executive officer of Countrywide.
Losses on subprime mortgages made last year will be 6 percent to 8 percent of the loan principal, Moody’s estimates, up from the credit rating company’s previous forecast of 5.5 percent to 6 percent.
Countrywide lost $1.11, or 3 percent, to $36.25. D.R. Horton Inc. fell 80 cents, or 3.4 percent, to $22.59.
Bank of America Corp. decreased 53 cents to $50.51. The second-largest U.S. lender agreed to buy ABN Amro Holding NV’s LaSalle unit for $21 billion in cash, making it the largest bank in Chicago and filling one of the few remaining holes in the nation’s most extensive branch network.
Britain’s Barclays PLC will buy the rest of ABN Amro for $91 billion in the world’s biggest financial-services acquisition.
Semiconductor stocks retreated after analysts said sales at Cisco Systems Inc. are slowing. Also, Applied Micro Circuits Corp. plunged the most since October 2000 quarterly sales missed its forecast.
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