US stock market stumbles on credit crisis

February 09, 2008 08:47am

Article from: Reuters

US stocks fell overnight as investors lost their appetite for risk and sold shares of financials, home builders and other sectors that have been at the centre of the credit-market crisis.

American Express shares led declines on the Dow, while Bank of America was the biggest drag on the S&P 500. The S&P Financials were the worst performer of the 10 major industry groups, losing 2.9 per cent.

The Dow Jones Industrial Average was down 102.75 points, or 0.84 per cent, at 12,144.25. The Standard & Poor's 500 Index .SPX was down 10.40 points, or 0.78 per cent, at 1326.51. The Nasdaq Composite Index was down 2.60 points, or 0.11 per cent, at 2290.43.

Trading has been jittery in the past few days, with indexes flipping direction several times during the session.

"A lot of people don't want to take a stand at this point, there's a lot of passive order flow, not big bets being taken," Mr Wiggs said.

In a sign of nervousness in the market, the US investment-grade credit derivative index widened to a record.

Analysts said US credit protection costs were surging on rumors that some structured credit vehicles with heavy losses are being liquidated.

Amid the uncertainty, investors will be more inclined to sell on a Friday, traders said.

"People are wary of taking risk going into the weekend. There's selling in some of the large banks and some of the consumer finance names," said Justin Wiggs, trader at Stifel Nicolaus Capital Markets in Baltimore.
American Express shares were down 5 per cent at $US44.15 and Bank of America stock was down 2.8 per cent at $US42.17.