Wall Street declines on profit fears

US stocks slid on Tuesday after Countrywide Financial Corp. reported slumping profits from the housing rout and analysts said demand for Apple Inc.'s iPhone is diminishing.

July 25, 2007 07:48
3 minute read.


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SHARES TEL AVIV CLOSED WALL STREET US stocks slid on Tuesday after Countrywide Financial Corp. reported slumping profits from the housing rout and analysts said demand for Apple Inc.'s iPhone is diminishing. The largest US mortgage lender plunged the most in almost a year on earnings that missed analysts' estimates. DuPont Co., the third-biggest US chemical maker, posted its steepest drop since 2005 after it said demand weakened for paint and countertops. Concern that the iPhone, which Apple expects to be its third-largest business, won't meet forecasts sent the shares to the biggest slide in six weeks. Homebuilders in the Standard & Poor's 500 Index retreated to the lowest since October 2003 and financial shares fell to a four-month low after Countrywide's results raised concern that borrowers are defaulting on less-risky mortgages. The S&P 500 lost 10.45, or 0.7 percent, to 1,531.12 in midday trade while the Dow Jones Industrial Average decreased 80.15, or 0.6%, to 13,863.27 and the Nasdaq Composite Index slid 17.81, or 0.7%, to 2,672.77. EUROPE Shares closed firmly in the red, with financials such as insurer Axa sharply lower and energy shares under pressure as oil prices fell. The pan-European Dow Jones Stoxx 600 index slid 1.3% at 390.01, with insurance and energy firms leading decliners. "The oil price going down means that the energy sector is coming off quite a bit," said Andrew Lynch, a European portfolio manager at Schroder Investment Management. "We do seem to be in a downtrend at the moment, with people waking up to higher interest rates. In the near-term, we are a little bit cautious." Higher interest rate expectations usually take a toll on the insurance sector. Shares in Axa declined 3.3%, Prudential shares slipped 2.7% and Old Mutual shares lost 3.9%. The UK's FTSE 100 index closed down 1.9% at 6,498.70, the German DAX 30 index dropped 1.7% to 7,806.79 and the French CAC 40 index was off 1.7% at 5,907.47. ASIA Stocks rose, driving a regional benchmark to a high, after Samsung Heavy Industries Co. reported better-than-expected earnings and Ping An Insurance (Group) Co. said profit may have doubled. KDDI Corp., Japan's second-biggest mobile-phone carrier, predicted an increase in net income, triggering the shares' biggest jump in eight weeks, and Toshiba Corp. advanced after a newspaper reported its earnings may be higher than forecast. BHP Billiton Ltd. climbed after the company announced record annual output for eight of its main commodities, setting the world's largest miner up for its largest profit, The Morgan Stanley Capital International Asia Pacific Index added 0.9%, to 161.36, as of 6:22 p.m. in Tokyo, having slid 0.4% from a high on Monday. The Nikkei 225 Stock Average added 0.2% to 18,002.03, while South Korea's Kospi index, which Tuesday touched 2,000 for the first time, was little changed. Other markets open for trading climbed, except for Pakistan and the Philippines. CURRENCY The shekel was at 4.19 to the dollar Tuesday afternoon. The dollar declined to a record low against the euro and weakened versus a dozen other of the most actively traded currencies on speculation subprime mortgage losses will deepen, slowing US growth. The drop accelerated after Countrywide Financial Corp. reported its third-straight decline in quarterly profit as late loan payments increased. The dollar dropped to $1.3835 per euro in morning trade in New York from $1.3807 Monday. It reached a record of $1.3852 earlier in the day. The dollar touched 120.41 yen, the weakest level since May 16, before trading at 120.56, compared with 121.09 Monday. COMMODITIES Crude oil fell for a third day on speculation that an Energy Department report will show US refineries increased fuel output and signs that OPEC is considering a production increase. Crude for September delivery fell $1.57, or 2.1%, to $73.32 a barrel in morning action on the New York Mercantile Exchange. August gold was up $1.80 to $683.30 an ounce on the COMEX division of the NYMEX. (News Agencies)

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