U.S. Stocks Slide On Reports Of More Trouble At Countrywide
NEW YORK (MarketWatch) -- U.S. stocks shed the bulk of early gains Tuesday as the financial sector weighed on equities following a report that Countrywide Financial Corp. had fabricated documents, spelling further trouble for the country's biggest home loan provider.
Shares of Countrywide were down 14% in the wake of a New York Times story detailing the company's alleged role in the bankruptcy case of a homeowner in Pennsylvania.
"This is the largest mortgage originator in the country, trading like it wants to go out of business; the financials are dragging everything down," said Peter Boockvar, equity strategist at Miller Tabak.
Up more than 65 points earlier on, the Dow Jones Industrial Average more recently fell 59.2 points to 12,768.3, with 17 of its 30 components in the red, led by financials, including American Express Co. , which was down 1.4%, Citigroup Inc. , off 2.6%, and J.P. Morgan Chase , down 1.9%.
Other blue-chip losses included shares of Microsoft Corp. , off 1.7%, after the technology giant's announcement that it would pay $1.2 billion to acquire Norwegian software developer Fast Search & Transfer. .
The S&P 500 rose 5.13 points to 1,411.05. The Nasdaq Composite fell 11.15 points to 2,488.31.
On the New York Mercantile Exchange, crude-oil futures were up $2.06 to $97.15 a barrel. .
Elsewhere on the NYME, gold futures surged to a new all-time high, with the contract for February delivery hitting $879.40 an ounce in electronic trade. .
Earlier on, equities investors paid little heed to the National Association of Realtors' report that pending home sales fell 2.6% in November and were down 19.2% in the past year. .
"Everybody has already written off the first quarter in terms of home sales and housing numbers. Nobody is giving the first quarter a chance for a turnaround anyway," said Marc Pado, U.S. strategist at Cantor Fitzgerald.
Volume on the New York Stock Exchange neared 581 million shares, and advancing stocks ran just ahead of those declining. On the Nasdaq, more than 922 million shares traded, and decliners outpaced advancing issues 3 to 1.
Active issues
Shares of Bear Stearns edged 1.7% lower following reports that James Cayne would relinquish his chief executive's post but remain as chairman in the wake of losses and a distressed share price. .
The Wall Street Journal reported another management reshuffle at Barclays PLC as the bank tries to recover from mortgage-related write-downs. Grant Kvalheim, a co-president of Barclays' investment-banking unit, is reportedly leaving.
Hit hard of late, shares of Starbucks rallied, gaining 9% after the coffee chain said former chief Howard Schultz would take the helm again at a time when Starbucks is facing slower traffic at U.S. stores. .
Ahead of the opening bell, KB Home reported fourth-quarter losses of about $773 million. Its stock fell 8.9%. .
In a speech early Tuesday, Charles Plosser, president of the Federal Reserve Bank of Philadelphia, said further cuts in interest rates probably won't be needed to heal the national economy. .
Pado, however, said another Fed rate cut is expected when central bankers meet later in the month.
"The Fed has got to move, and good, bad or neutral housing numbers aren't going to impact that; there's a chance for a 50 basis point move at the end of January," said Pado.
Overseas, Asian shares were mixed, with Tokyo ending ahead and Hong Kong falling. .
By Kate Gibson