Monday, January 14, 2008

US stocks slammed by bad credit fears

US stocks slammed by bad credit fears

New York (dpa) - US stocks fell Friday as investors feared declining profits at a credit card firm and slower sales at a luxury jeweller signaled weakening spending among high-end consumers.

Recession fears also pushed the price of gold above $900 per fine ounce for the first time.

"There was this perception that the upper-end consumer was resistant to the economy, and that may be starting to roll over," Matthew Kaufler of Clover Capital Management told Bloomberg financial news. "Housing has been in recession, the financial institutions are also feeling it, and now you have signs that the consumer is starting to buckle. We seem to be in a rolling recession."

The benchmark Standard & Poor's 500 Index dropped 19.31 points, or 1.4 per cent, to 1,401.02. The blue-chip Dow Jones Industrial Average slid 246.79, or 1.9 per cent, to 12,606.30. The tech-heavy Nasdaq Composite Index lost 48.58, or 2 per cent, to 2,439.94.

American Express the third-largest US credit card firm fell 10 per cent to 44 dollars per share after saying its earnings would be less than expected and that it would take a charge on higher customer defaults.

High end jeweller Tiffany & Co dipped 11 per cent to 35.80 dollars after holiday sales fell 2 per cent from the previous year.

Recession fears have been spurred largely by a credit crunch and higher defaults on home mortgages.

Bank of America on Friday said it will buy the largest US mortgage lender Countrywide Financial Corp for 4 billion dollars after the lender suffered heavy losses in the subprime mortgage crisis.

Countrywide stock fell 1.42 dollars to 6.33 dollars per share because the offer was less than the company's market value after it had surged more than 50 per cent on rumours of the deal Thursday, Bloomberg said. Bank of America also slipped on the market, down 80 cents to 38.50 dollars.

The US dollar rose to 67.68 euro cents from 67.56 on Thursday in New York. The dollar fell to 108.94 Japanese yen from 109.36.

Gold rose 4.10 dollars to 897.70 dollars per fine ounce in New York. Earlier in the day it had hit a high of 900.10 before retreating.

06:37 Jan 12, 2008

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