Thursday, Oct 16, 2008
U.S. stocks retreated for a third day, erasing the gains from the biggest rally in seven decades, after Citigroup Inc. said bad loans may rise to a record high and the government said manufacturing fell the most since 1974.
Citigroup declined 8.8 percent after saying loss rates on credit cards and mortgages may climb as the economy deteriorates. American Express Co., the largest U.S. card network by purchases, slid 8.9 percent. General Electric Co., the world’s biggest industrial company, lost 3.6 percent and extended its plunge over the past month to 26 percent.
“The frozen credit markets and the shock coming out of these stresses we’ve had in the capital markets have exacted a toll on the real economy,” U.S. Treasury Secretary Henry Paulson said in an interview with Bloomberg Television. “We’ve seen that in some of the numbers recently. We’re going to have a number of tough months here.”
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The Standard & Poor’s 500 Index declined 40.29 points, or 4.4 percent, to 867.55 at 11:12 a.m. in New York, below its lowest close since April 2003. The Dow Jones Industrial Average slid 356.26, or 4.2 percent, to 8,221.65. The Nasdaq Composite Index slipped 54.93 to 1,573.4. Ten stocks dropped for each that rose on the New York Stock Exchange.
The retreat over the past three days erased all of the 12 percent gain in the S&P 500 on Oct. 13, when the market rallied the most since the 1930s on speculation the government’s plan to shore up banks will ease the credit crisis. Efforts to calm financial markets probably won’t result in an immediate economic rebound, Federal Reserve Chairman Ben S. Bernanke told the Economic Club of New York yesterday.