Nov. 21 -- U.S. stocks fell, led by financial companies and retailers, after former Federal Reserve Chairman Alan Greenspan said the credit-market recovery has ``come to a halt'' and oil prices climbed toward $100 a barrel.
Freddie Mac, the second-biggest source of funds for U.S. mortgages, declined for a sixth day after Goldman, Sachs & Co. said the value of its assets will continue to slide. Countrywide Financial Corp., the biggest U.S. mortgage company, also tumbled. Limited Brands Inc., owner of the Victoria's Secret chain, slid to an almost four-year low after profit decreased on slumping lingerie sales.
The Standard & Poor's 500 Index lost 11.41, or 0.8 percent, to 1,428.29 as of 9:36 a.m. in New York. The Dow Jones Industrial Average declined 96.24, or 0.7 percent, to 12,913.9. The Nasdaq Composite Index dropped 27.74, or 1 percent, to 2,569.07. U.S. Treasuries rallied, sending 10-year yields below 4 percent for the first time in more than two years.
``It's a very panicky market,'' said John Kattar, who oversees $2 billion as chief investment officer at Eastern Investment Advisors in Boston. ``There's a growing feeling that the problems are unknowable and unquantifiable, and that there's no way of dealing with it except through the passage of time.''
Asian and European markets retreated after the Fed lowered its 2008 outlook for economic growth in minutes of the October policy meeting released yesterday. Trading in the U.S. may be lower today because of the Thanksgiving holiday tomorrow.
Freddie Mac declined $2.24 to $24.50. Goldman cut its price estimate on shares of the second-largest U.S. mortgage-finance company to $24 from $73 and lowered its 2008 earnings estimate by 82 percent.
`Heart' of Mortgage Market
Freddie Mac might need to raise as much as $6 billion to bolster its capital amid the worst housing slump in at least 16 years, according to analysts at Fox-Pitt Kelton. The government- chartered company dropped 29 percent yesterday after reporting its biggest quarterly loss and saying it may cut its dividend. Freddie said it would seek more reserves in a ``large transaction.''
``Investors are worried about Freddie Mac and Fannie Mae as they are at the heart of the prime mortgage market,'' said John Haynes, U.S. equity strategist at Rensburg Sheppards Plc in London. ``This increases concern the crisis is spilling into other sectors.''
'Come to a Halt'
Greenspan said recent signs that a collapse in credit tied to subprime-mortgage lending was ending have proven wrong.
``The progress has come to a halt'' in recent weeks, Greenspan said at a business forum in Toronto today. ``The reason is increasing recognition that it's going to take a long while to get rid of those excess inventories of homes in the U.S.''
Countrywide lost 67 cents to $9.61. Citigroup Inc., the largest U.S. bank by assets, declined 70 cents to $30.70. Goldman Sachs Group Inc., the world's biggest securities firm by market value, fell $3.86 to $213.62.
Limited Brands slumped 76 cents to $16.77. Earnings missed analysts' estimates, with net income declining to $12.1 million, or 3 cents a share, from $23.5 million, or 6 cents, a year earlier, the retailer said. Limited Brands also owns Bath & Body Works, a chain that sells shampoo and body lotion.
$99 A Barrel
Crude oil climbed above $99 a barrel for the first time as a slumping U.S. dollar made crude cheaper for foreign buyers.
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