U.S. Stocks Fall; Exxon, Freeport-McMoRan, Caterpillar Decline

Dec. 17 -- U.S. stocks extended their worst weekly drop in a month, led by energy producers and chipmakers, on growing concern that the U.S. economy will slow.

Exxon Mobil Corp., the biggest U.S. oil company, and Freeport-McMoRan Copper & Gold Inc., the world's second-largest copper producer, declined on slumping fuel and metals prices. Micron Technology Inc., the biggest U.S. producer of computer- memory chips, fell the most in two months after an analyst forecast a wider loss. Caterpillar Inc. dropped to the lowest since Nov. 27 after Morgan Stanley said construction-equipment sales will slow next year.

The Standard & Poor's 500 Index slipped 16.03, or 1.1 percent, to 1,451.92 at 2:11 p.m. in New York. The Dow Jones Industrial Average sank 134.21, or 1 percent, to 13,205.64. The Nasdaq Composite Index lost 44.37, or 1.7 percent, to 2,591.37. Almost three stocks dropped for every one that rose on the New York Stock Exchange. Benchmark indexes in Asia and Europe retreated.

``You're going to see tight credit markets result in lower economic growth,'' said Wayne Wicker, who helps oversee $31.5 billion as chief investment officer at Vantagepoint Funds in Washington. ``We're not going to have the ebullient times that we've had in the past.''

Today's retreat trimmed the S&P 500's gain for the year to 2.4 percent, while the Dow is up 6 percent in 2007 and the Nasdaq has gained 7.3 percent. Treasury notes rose for the first time in four days as a decline in global stocks fueled demand for the safety of government debt.

Exxon, Freeport

Exxon lost $1.42 to $89.76 after crude oil fell below $90 a barrel in New York on concern inflation and subprime mortgage losses will reduce economic growth. Freeport-McMoRan tumbled $4.75 to $97.36 after copper fell to a nine-month low.

Micron Technology fell 49 cents, or 5.9 percent, to $7.88. The company's product prices have dropped below the cost of production because of an industry glut of dynamic random access memory chips, the main memory in personal computers, said Jefferies & Co. analyst John Lau. Intel Corp., the world's biggest maker of computer chips, slumped 58 cents to $25.72.

Caterpillar Inc. decreased $2.35 to $71.04. Morgan Stanley cut the shares to ``underweight'' from ``equal weight.'' U.S. construction equipment volumes and prices will decline in 2008, analysts including Robert Wertheimer wrote in a note to client.

EBay, Amazon

EBay Inc., the largest Web-based auction company, and Amazon.com Inc., the biggest Internet retailer, slumped on signs holiday sales growth online is slowing. ComScore Inc., a research firm, said online spending from Nov. 1 through Dec. 14 rose 18 percent to $22.7 billion, trailing the firm's forecast for 20 percent growth in November and December and last year's 26 percent gain.

EBay fell 45 cents to $32.25. Amazon.com declined $3.22 to $85.86.

A jump in consumer prices and $70 billion in bank losses on mortgage-backed securities has spurred concern that the U.S. economy may slow as spending and borrowing decline. Through the first 11 months of this year, consumer prices rose at an annual rate of 4.2 percent. That's up from 2.5 percent for all of 2006 and, if maintained in December, would be the highest rate in 17 years.

``We see the economy contracting'' on higher fuel costs and falling home prices, said David Darst, who manages more than $700 billion as chief investment strategist at Morgan Stanley Global Wealth Management in New York. ``We have some further shoes to drop as we unfold in '08.''

M&A

Trane Inc. surged $8.37 to $45.57 after the maker of heaters and air conditioners agreed to be bought by Ingersoll- Rand Co. for $10.1 billion in cash and stock. Ingersoll-Rand will pay $36.50 in cash and 0.23 of a share for Trane, valuing the manufacturer at $47.81 based on the Dec. 14 closing price. The offer is 29 percent more than Trane's close that day.

Ingersoll-Rand posted its biggest loss in more than seven years, slumping $5.29, or 11 percent, to $43.89.

Grant Prideco Inc. jumped $6.29 to $53.75. National Oilwell Varco Inc., the largest U.S. maker of oilfield equipment, agreed to buy its smaller rival for about $7.4 billion to add sales of drilling pipes and bits. The company said it will pay a combination of cash and stock that values Grant Prideco at $58 per share, a 22 percent premium. National Oilwell tumbled $7.26 to $70.11.

Illinois Tool Works Inc. slumped $2.61 to $53.29. The maker of Duo-Fast nail guns cut its full-year profit forecast as acquisitions and lower-than expected sales in North America cut profits.

Bond Insurers

Bond insurers gained after Moody's Investors Service affirmed AAA credit ratings for Ambac Financial Group Inc. and MBIA Inc. Ambac, the world's second-largest bond insurer, was affirmed with a stable outlook after the close of trading on Dec. 14, surprising analysts who expected the company to be more at risk of a downgrade than competitors. The shares surged $3.69 to $26.50.

MBIA, the largest bond insurer, rose $1.11 to $28.71 after being affirmed with a negative outlook.

Manufacturing in New York expanded at the weakest pace since May as orders for new business slowed and companies cut inventories. The New York Federal Reserve Bank's general economic index fell to 10.3 from 27.4 in November, the bank's Buffalo branch said, lower than the reading of 20 forecast by economists in a Bloomberg survey.