More News: Wall Street Plunges

Nov 20, 2007

SELLDOWN IN FINANCIAL FIRMS
Wall St plunges on Citi, economic worries

NEW YORK - STOCKS in the United States slid yesterday as a brokerage downgrade of Citigroup sparked a sell-off in financial services companies on concerns about credit losses and the housing slump.

Goldman Sachs cut Citigroup to 'sell' and said the bank may have to write off US$15 billion (S$21.8 billion) over the next two quarters as mortgage losses reduce earnings.

After two hours of trading, the Dow Jones Industrial Average was down 167.05 points, or 1.27 per cent, at 13,009.74. The Standard & Poor's 500 Index was down 19.41 points, or 1.33 per cent, at 1,439.33. The Nasdaq Composite Index was down 32.93 points, or 1.25 per cent, at 2,604.31.

In addition, a brokerage said Freddie Mac, the No.2 US home funding source, may suffer between US$1 billion and US$5 billion of US sub-prime mortgage losses.

'Financials keep on going down,' said OakBrook Investments head trader Giri Cherukuri. 'You had the Citigroup downgrade and there are general worries about how many more write-offs there are to come.'

Citigroup shares fell 5.2 per cent to US$32.26 on the New York Stock Exchange, while shares of Bank of America declined 3.3 per cent to US$42.89.

REUTERS