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U.S. stocks dropped for a second day
By: Finotec - 29-08-2007
0votesU.S. stocks dropped for a second day, erasing last week's advance, after consumer confidence fell the most in two years and Merrill Lynch & Co. analysts said tighter credit markets will hurt bank earnings. Financial shares have posted the biggest
''Our concern when we look out is with the U.S. consumer,'' said David Chalupnik, who helps manage about $100 billion as senior managing director at First American Funds in Minneapolis. ``Are the housing issues that we're seeing going to finally depress the U.S. consumer? That's the risk that we see.''
Stocks extended their decline today after minutes from the Fed's Aug. 7 policy meeting showed central bankers put aside concerns about the rising cost of credit because they weren't convinced a slowdown in inflation would last.
The minutes from the Fed's last Open Market Committee meeting don't include the Aug. 16 emergency video conference when officials revamped their policy statement and cut the rate the Fed charges banks on direct loans. The benchmark lending rate was kept unchanged.
Markets in Europe and Asia retreated, led by financial companies on concern the subprime mortgage rout is spreading and will erode global economic growth. The Morgan Stanley Capital International World Index slipped 1.5 percent to 1,525.60.
Investors have been shunning the asset-backed commercial paper market because of concerns about the mortgage-related securities underlying the debt.
Consumer confidence fell this month by the most since just after Hurricane Katrina two years ago. The New York-based Conference Board's index declined to 105 from 111.9 in July. Economists surveyed by Bloomberg News forecast the index would slip to 104 from an originally reported July reading of 112.6.
The yen advanced the most in almost two weeks against the dollar on speculation banks will report more credit-market losses, prompting traders to pare higher-yielding investments funded by loans in Japan.
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