U.S. Stocks Slammed At The Start By Retail Report, Financials
NEW YORK (MarketWatch) -- U.S. stocks on Friday began steeply lower after a two-day winning streak, with an unanticipated drop in retail sales and high anxiety over the fate of investment bank Lehman Brothers Holdings Inc. weighing on investors' sentiment.
"The U.S. economy is weak and likely getting weaker. There seems to be no end to the shoes that keep dropping around the financial services companies - obviously we are dealing with an octopus - and we just aren't sure who is next,'" said Kevin Giddis, managing director, Morgan Keegan & Co. Inc.
The Dow Jones Industrial Average shed 140.36 points to 11,293.35, with 25 of its 30 components posting losses, led by American International Group Inc. down 20.1%.
The S&P 500 fell 13.80 points to 1,235.25, with consumer discretionary and financials the hardest hit sectors in the early going, while the energy sector was the only strong gainer of the index's 10 industry groups.
The Nasdaq Composite declined 27.39 points to 2,230.83.
On the New York Mercantile Exchange, crude-oil futures gained $1.23 to $102.10 a barrel.
Ahead of Wall Street's start, stock index futures extended their losses after the Commerce Department reported a 0.3% August decline in August, compared to the 0.4% gain expected by economists. .
Separately, the Labor Department said U.S. producer prices fell 0.9% in August, pushed lower in large part by declining energy costs. Core PPI prices, which excludes food and energy, gained 0.2% last month.
The University of Michigan consumer sentiment data for September is due shortly after the start of the trading day.
The market in large part is fixated on Lehman , as well as potential buyers of the embattled brokerage's assets. Bank of America Corp. is Lehman's "best hope," according to an article in the Wall Street Journal.
Lehman shares fell 10.7%.
Shares of Washington Mutual Inc. were down 3.2% after its late-Thursday update saying it is well capitalized and that provision for loan losses will drop to about $4.5 billion from $5.9 in the second quarter.
Goldman Sachs upgraded Washington Mutual to neutral from sell, saying the lender's capital is absorbing pain. Moody's Investors Service, however, cut its credit rating to below investment grade.
By Kate Gibson