13 Aug 2008

Credit worries drag Wall Street lower

6:48 pm on 13 August 2008

US stocks fell on Tuesday, as bank shares tumbled on fresh worries about the economy and further losses stemming from the mortgage crisis.

News that JPMorgan Chase has racked up $US1.5 billion of losses so far this quarter on mortgage-linked assets sent the bank's stock down more than 9.5% to $37.92.

The bank had largely escaped the worst of the credit crunch and its losses highlighted concerns that turmoil in financial markets may deepen.

Goldman Sachs also weighed on the financial sector after a number of analysts cut their earnings estimates for the investment bank.

The Dow Jones industrial average fell 139.88 points, or 1.19%, to 11,642.47, while the Standard & Poor's 500 Index slid 15.73 points, or 1.21%, to 1,289.59. The Nasdaq Composite Index dropped 9.34 points, or 0.38%, to 2,430.61.

While the recent drop in oil prices has helped to lift stocks from their July lows, unease about the financial sector on Tuesday tempered hopes that cheaper energy prices would revitalise consumer and business spending, key drivers of profit growth.