S&P 500 ends day at lowest since ‘92
New York — Stocks retreated for a fifth day Tuesday as Federal Reserve Chairman Ben Bernanke said the banking system still hasn’t stabilized, offsetting gains in commodity shares on speculation China will boost demand for raw materials.
Goldman Sachs Group Inc. and MetLife Inc. dragged a gauge of financial companies in the Standard & Poor’s 500 index to its lowest level since 1992. Home Depot Inc. fell more than 4.6 percent for a second day as fewer Americans than forecast signed contracts to buy previously owned houses. Freeport-McMoRan Copper & Gold Inc. jumped 7.3 percent as China, the world’s largest consumer of copper, said its economy will recover this year.
"The prevailing mood now is that the government doesn’t have enough bullets to deal with the problem," said Hayes Miller, who helps manage $30.4 billion at Baring Asset Management Inc. in Boston. "There are too many uncertainties, and I don’t think any particular plan is going to wipe the slate clean."
The S&P 500 slid 0.6 percent to 696.33, its first close below 700 since October 1996. The Dow Jones industrial average lost 37.27 points, or 0.6 percent, to an almost 12-year low of 6,726.02.
Goldman Sachs lost 4.5 percent to $82.37, while MetLife fell 17 percent to $13.72.
Home Depot dropped $1.03 to $18.89.
With the S&P 500 below 700, potential payouts to customers with minimum-return guarantees on financial products linked to the performance of stocks absorb nearly all of the excess capital at Prudential Financial Inc. and Hartford Financial Services Group Inc., according to Randy Binner, an analyst at Friedman, Billings, Ramsey Group Inc. Prudential lost 13 percent to $12.90, and Hartford slumped 9.4 percent to $4.63.
General Electric Co. had the biggest loss in the Dow, falling 7 auto car loan.8 percent to 7.01 on speculation that its finance division needs more capital. Trading of put options, which give the right to sell the stock at a set price and date, rose to a record 459,871 and the second-most active options were contracts that give the right to sell the stock at $2.50 by June. Those options rose 30 percent to 26 cents.
Freeport-McMoRan rallied $1.92 to $28.41, and Southern Copper Corp. added $1.01, or 7.9 percent, to $13.75.
Dell Inc. rose 8.5 percent to $9.15. The second-largest maker of personal computers said the PC market is challenging and that products such as low-cost netbooks and storage devices may help boost profit.
The Dow average dropped below 7,000 for the first time since 1997 Monday after Warren Buffett said the economy is in shambles and American International Group Inc. posted the largest corporate loss in U.S. history.
The deepening global recession, a third government rescue for Citigroup and dividend cuts at companies from General Electric Co. to JPMorgan Chase & Co. have dragged the S&P 500 to three consecutive weeks of declines, pushing the index down 23 percent this year.
The S&P 500 has dropped almost 56 percent since its October 2007 record close as the U.S., Europe and Japan fell into the first simultaneous recessions since World War II.
Profits among S&P 500 companies may decrease 34.8 percent in the first quarter and 14.7 percent for all of 2009, according to analyst estimates compiled by Bloomberg. At the start of the year, analysts predicted first-quarter earnings would retreat 10.3 percent and foresaw a 4.5 percent increase in 2009 income.
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