- U.S. stock futures fell on concern credit-market losses are accelerating after analysts cut ratings on mortgage lenders and an Australian company said the subprime rout may have wiped out 80 percent of one of its hedge funds.
Countrywide Financial Corp., the biggest U.S. mortgage company, dropped for a fifth day after Merrill Lynch & Co. advised clients to sell the shares and said ``funding markets are deteriorating quickly.'' Goldman Sachs Group Inc., the largest securities firm, retreated after it waived fees to draw investors to one of its hedge funds.
Standard & Poor's 500 Index futures expiring in September declined 9 to 1425.3 as of 8:02 a.m. in New York. Dow Jones Industrial Average futures lost 77 to 13,012 and Nasdaq 100 Index futures decreased 14.75 to 1,900.
``Feels like we're on the edge of a panic to me,'' said Jeffrey Saut, who oversees $33.7 billion as chief investment strategist at Raymond James & Associates in St. Petersburg, Florida. ``In our business, psychology is everything and psychology has changed real quick on Wall Street.''
European and Asian stocks also declined on concern the fallout from the subprime-mortgage rout is spreading. Basis Capital Fund Management Ltd. told investors one of its hedge funds may have lost more than 80 percent and it is unable to ``accurately estimate'' the value of units in its Yield Fund, according to a letter to investors obtained by Bloomberg News.
Countrywide, MFA
Countrywide tumbled $1.46 to $23 after it was cut to ``sell'' from ``buy'' at Merrill.
MFA Mortgage Investments Inc. lost 18 cents to $6.22 in Germany after analysts at Bear Stearns & Co. cut their rating on the company that invests in adjustable-rate mortgage-backed securities to ``peer perform'' from ``outperform,'' citing ``challenging funding conditions.''
KKR Financial Holdings LLC slipped 87 cents to $14.40. The real-estate unit of buyout firm Kohlberg Kravis Roberts & Co. was cut to ``equal weight'' from ``overweight'' at Lehman Brothers Holdings Inc.
Goldman fell $2.15 to $167.60. The firm waived the management fee for new investors in its Global Equity Opportunities hedge fund after the stock-market rout wiped out $1.4 billion of assets this month, according to a person familiar with the terms. Spokesman Lucas van Praag confirmed the terms and declined to comment further.
``In order to lure outside investors, they had to sweeten the deal,'' said Ross Intelisano, a lawyer in New York at Rich & Intelisano LLP, which advises hedge fund clients.
Housing Report
A report scheduled for release today is likely to show confidence among U.S. homebuilders fell further this month, signaling the housing market continues to tumble.
The European Central Bank, the Fed and other central banks have injected more than $350 billion into money markets worldwide since Aug. 9 amid concerns that U.S. subprime mortgage losses will curtail lending and push up short-term interest rates.
The U.S. subprime mortgage crisis will cost credit investors about $150 billion in losses worldwide, according to Calyon, the investment banking unit of Credit Agricole SA, France's third- largest bank by market value.
Applied Materials
Applied Materials fell $1 to $20.24 in Germany. The largest manufacturer of semiconductor-production machines said orders, an indicator of future sales, retreated 14 percent from the previous quarter, at the lower end of a forecast given by Chief Executive Officer Mike Splinter in May.
The Santa Clara, California-based company forecast another shortfall this quarter amid slumping demand for electronic- measurement products in Asia, especially Japan.
Agilent Technologies Inc. plunged $3.96 to $32.37 in Germany after the world's biggest maker of scientific-testing equipment said yesterday third-quarter profit dropped 19 percent, more than analysts estimated.
Deere & Co., the world's largest maker of farm equipment, lost 47 cents to $116.62 in Germany. The company said third- quarter earnings rose 23 percent on sales of tractors in the U.S. and Brazil. The company expects 2007 construction and forestry sales to decline by about 12 percent.
The National Association of Home Builders/Wells Fargo sentiment index probably declined to 23 this month, from 24 in June, according to the median estimate from economists in a Bloomberg survey. The Washington-based association is due to report at 1 p.m. Readings less than 50 mean most respondents view conditions as poor.
Among other reports today, consumer prices in the U.S. probably rose in July at the slowest pace in eight months as gasoline receded, economists said.
To contact the reporters on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net ; Lynn Thomasson in New York at lthomasson@bloomberg.net .
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