Stocks Retreat Amid Bad Debt Worries

[Jasman0717 9]

NEW YORK (AP) — Stocks pulled back sharply Monday as news that major U.S. banks will set up a fund to help bail out the credit markets stirred concerns about bad debt and as oil prices surged to $86 per barrel for the first time. The Dow Jones industrial average lost more than 100 points.

The stock market's pullback comes not only amid concerns about debt and rising energy costs but as investors await third-quarter reports due this week from more than 80 components of the Standard & Poor's 500 index. The concerns about banking came after Citigroup Inc., the biggest U.S. bank, reported that third-quarter results fell 57 percent. The company said it lost more than $3 billion in mortgage-backed security losses, leveraged debt write-downs and fixed-income trading losses.

The bank — along with JPMorgan Chase & Co. and Bank of America Corp. — announced the creation of a fund used to help revive the asset-backed commercial paper market. The fund will buy assets from structured investment vehicles, also known as SIVs, which buy corporate bonds and subprime mortgage debt. The bailout was orchestrated by the Treasury Department to avoid a fire sale in the market. "It's a reminder that this problem never was entirely put to bed. There may be financial institutions out there that are in more trouble than we thought they were," said Aaron Gurwitz, co-head of portfolio strategy at Lehman Brothers Investment Management, referring to concerns about bad debt. He also noted that Monday's pullback wasn't unusual given the back-and-forth moves in the major indexes in recent sessions.

The Dow fell 108.28, or 0.77 percent, to 13,984.80.

Broader stock indicators also declined. The S&P 500 index fell 13.09, or 0.84 percent, to 1,548.71, and the Nasdaq composite index fell 25.63, or 0.91 percent, to 2,780.05.

Bonds fell following a better-than-expected regional economic reading in New York. The yield on the benchmark 10-year Treasury note rose to 4.68 percent from 4.65 percent late Friday. The dollar was mixed against most other major currencies, while gold prices rose.

Light, sweet crude rose to record levels, crossing $86 per barrel for the first time and rising as high as $86.22 in trading. Oil settled up $2.44 at $86.13 per barrel on the New York Mercantile Exchange as after the Organization of Petroleum Exporting Countries said crude production by countries that aren't OPEC members is probably falling despite rising demand.

The week's economic calendar is light. On Monday, the New York Empire State Index — a regional economic indicator published by the Federal Reserve Bank of New York — came in better than expected for October. The index rose to 28.75 from September's 14.70.

Investors are keeping tabs on corporate and economic data as they try to determine how well profits will fare.

"All those guys are tempering their expectations because the economy is slowing," said Thomas Nyheim, vice president and portfolio manager at Christiana Bank & Trust Co., referring to Wall Street's estimation for moderate growth in third-quarter profits.

The concerns over soured loans drew comments from Treasury Secretary Henry Paulson, who said in a speech Monday that the troubles with SIVs might require regulators to step in to stave off future problems, according to Dow Jones Newswires.

Wall Street's unease Monday follows a period of calm after worries about credit roiled markets around the world over the summer. During August and into September, investors were concerned that mortgages made to borrowers with poor credit that had been bundled together and sold off as investments would resurface and cause widespread losses. Indeed, some hedge funds and other investment vehicles worldwide that held subprime debt succumbed to the soured loans. It wasn't until the Fed stepped in with reductions in short-term interest rates and the rates it charges to loan to banks that the credit markets began to show signs of recovery.

Citigroup fell $1.63, or 3.4 percent, to $46.24 after the bank raised its loan-loss provisions by $2.24 billion — a higher amount than it estimated a week ago — amid expectations of further deterioration in consumer credit. The bank also said it would delay repurchases of its shares.

Medtronic Inc. fell $6.33, or 11 percent, to $50 after the company said it is halting distribution of wires that connect some of its defibrillators to patients' hearts after learning they may have contributed to five deaths.

Biogen Idec Inc. jumped $13.08, or 19 percent, to $82.51 after the company said it may sell itself and that it has drawn interest from potential buyers.

Declining issues outnumbered advancers by about 8-to-3 on the New York Stock Exchange, where consolidated volume came to 3.03 billion shares compared with 2.71 billion shares traded Friday.

The Russell 2000 index of smaller companies fell 11.81, or 1.40 percent, to 829.36. Overseas, Japan's Nikkei stock average closed up 0.16 percent. Britain's FTSE 100 fell 1.28 percent, Germany's DAX index fell 0.89 percent, and France's CAC-40 fell 0.62 percent.

[Hilarious Clinton 452]

You don't lose to you sell. Don't sell.

[Pinocchio Liberal 268]

You don't lose to you sell. Don't sell.

My 401-k is gettin after it. Bonds are gonna be gettin my attention soon though. Election time!

[Jasman0717 9]

You don't lose to you sell. Don't sell.

I have my money in retirement accounts, 401k and 457. The 401k is fairly stable but the 457 has been getting hit lately after a steady climb over the past six years. I just hate to go backwards getting this close to retirement

[Pinocchio Liberal 268]

You don't lose to you sell. Don't sell.

I have my money in retirement accounts, 401k and 457. The 401k is fairly stable but the 457 has been getting hit lately after a steady climb over the past six years. I just hate to go backwards getting this close to retirement

Volitility index should be watched closely here!

[Jasman0717 9]

You don't lose to you sell. Don't sell.

I have my money in retirement accounts, 401k and 457. The 401k is fairly stable but the 457 has been getting hit lately after a steady climb over the past six years. I just hate to go backwards getting this close to retirement

Volitility index should be watched closely here!

Maybe in a couple of years when I get closer to retirement. I just hate seeing my account go down with these market declines.

[kaydee457 13]

You don't lose to you sell. Don't sell.

I have my money in retirement accounts, 401k and 457. The 401k is fairly stable but the 457 has been getting hit lately after a steady climb over the past six years. I just hate to go backwards getting this close to retirement

Volitility index should be watched closely here!

Maybe in a couple of years when I get closer to retirement. I just hate seeing my account go down with these market declines.

Man'o man, I hear ya! My 401k has gone from +12% to -4%, back to 7%, down to near zero a couple weeks later, and recently finishing at +16% as we speak........

The only thing that saved my behind are the Equities and International funds. The US market's been a drag on my portfolio.

Unfortunately, when the U.S. market hits a snag it drags the rest of the world markets with it!

I'm planning an early retirement in late 2008, or early 2009 but this roller-coaster has me rethinking that......

Do you have a pension also or is your 401k and SS your primary source of retirement income?

I fortunately have a company pension as well as my 401k, and possibly SS at 66, unless of course the dem's get elected. All bets are off if that happens!

[Jasman0717 9]

You don't lose to you sell. Don't sell.

I have my money in retirement accounts, 401k and 457. The 401k is fairly stable but the 457 has been getting hit lately after a steady climb over the past six years. I just hate to go backwards getting this close to retirement

Volitility index should be watched closely here!

Maybe in a couple of years when I get closer to retirement. I just hate seeing my account go down with these market declines.

Man'o man, I hear ya! My 401k has gone from +12% to -4%, back to 7%, down to near zero a couple weeks later, and recently finishing at +16% as we speak........

The only thing that saved my behind are the Equities and International funds. The US market's been a drag on my portfolio.

Unfortunately, when the U.S. market hits a snag it drags the rest of the world markets with it!

I'm planning an early retirement in late 2008, or early 2009 but this roller-coaster has me rethinking that......

Do you have a pension also or is your 401k and SS your primary source of retirement income?

I fortunately have a company pension as well as my 401k, and possibly SS at 66, unless of course the dem's get elected. All bets are off if that happens!

When I left my old company, right when the market was taking a dive, I moved my 401k money into the stable value account. They say to not do that but I had already lost 30k. Stable value has earned back what I lost and then some. That is my guarenteed money for retirement I will continue to play with the 457 until I get closer to retirement.

[Jasman0717 9]

Damn, the market started out down again today

[kaydee457 13]

Damn, the market started out down again today

Oh Oh.......Deja vu? Black Monday again?

[Jasman0717 9]

Wow, down 366 points and gas is on the rise again

[Dan J 277]

Wow, down 366 points and gas is on the rise again

Bad day in the markets today.

[mendeleev 68]

Things are on sale! Time to buy.

[Jasman0717 9]

Wow, down 366 points and gas is on the rise again

Bad day in the markets today.

Its been there before so might as well just ride the storm out