Nov. 9 -- U.S. stock-index futures pointed to a 92-point drop in the Dow Jones Industrial Average as Wachovia Corp. and Barclays Plc reignited concern about the plummeting value of debt securities.
Wachovia, the fourth-largest U.S. bank, tumbled after saying its asset-backed collateralized debt obligations declined by about $1.1 billion in October and it boosted its estimate for loan losses. Goldman Sachs Group Inc. and Citigroup Inc. also slid after traders speculated Barclays, Britain's third-largest lender, may announce a writedown of as much as $21 billion. Barclays denied the speculation.
Standard & Poor's 500 Index futures expiring in December lost 13.2 to 1,462.3 as of 9:17 a.m. in New York. Dow average futures decreased 92 to 13,170. Nasdaq-100 Index fell 52.76 to 2,696. Stocks fell in Europe and Asia amid speculation banks face more subprime-mortgage related losses.
``Investors are concerned about the financial system,'' said David Baker, who helps manage $1.1 billion as chief investment officer at North American Management Corp. in Boston. ``We've avoided financials because we didn't understand many of their exposures and we thought there was too much risk.''
The S&P 500 is poised to drop for a second straight week after banks and brokerages wrote down their holdings of debt securities and set aside more money for bad loans. Cisco Systems Inc. yesterday spurred concern that earnings at technology companies may be vulnerable to the housing slowdown and credit market slump after saying a drop in sales to financial and automobile companies is curbing growth.
Weekly Loss
The S&P 500 and Dow average have lost 2.2 percent this week, while the Nasdaq has tumbled 3.5 percent for its biggest slide since the end of July.
Federal Reserve Chairman Ben S. Bernanke told lawmakers in Washington yesterday that officials already expect the economy to ``slow noticeably'' this quarter. The Reuters/University of Michigan consumer sentiment index is expected to show today that confidence among consumers this month fell to the lowest since May 2006 as the housing slump deepened.
Wachovia retreated $1.75 to $38.55. The bank expects to increase its allocation for loan losses to as much as $600 million in the fourth quarter. Wachovia held $676 million of asset-backed collateralized debt obligations as of Oct. 31, down from $1.8 billion at the end of September, according to a regulatory filing.
Banks Decline
Goldman dropped $6.94 to $203. Citigroup decreased 74 cents to $32.16.
Qualcomm tumbled $2.91 to $36.85. The company's report further clouded the outlook for technology shares. Qualcomm trimmed its profit forecast for fiscal 2008 by as much as 30 cents a share to as little as $2.03 late yesterday. Analysts in a Bloomberg survey had estimated earnings of $2.14 a share.
3M Co., the maker of 50,000 products from Post-it Notes to electronic road signs, dropped $2.61 to $80.22. Goldman, Sachs & Co. analysts said investors should sell the shares because a slowdown in U.S. consumer spending next year may hurt earnings.
The Morgan Stanley Capital International Asia Pacific Index dropped 0.3 percent amid speculation Mizuho Financial Group Inc. will delay a brokerage merger because of subprime-mortgage losses.
Europe's Dow Jones Stoxx 600 Index fell 1.3 percent on concern Barclays Plc, Britain's third-biggest lender, may announce a writedown of as much as 10 billion pounds on its assets, traders said. The bank denied the speculation.
The U.S. trade deficit unexpectedly narrowed in September by 0.6 percent to $56.5 billion, the smallest since May 2005, the Commerce Department said. Exports reached new highs for a seventh straight month as a slumping dollar and global economic growth boosted demand for American products.
Prices for goods imported into the U.S. rose 1.8 percent in October, the most in 17 months and more than economists forecast, as oil neared a record. Prices excluding petroleum rose 0.5 percent, the Labor Department said.
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