US stocks fall on retail sales figures (Lead)

January 15th, 2009 - 7:18 am ICT by IANS  

New York, Jan 15 (Xinhua) US stocks fell Wednesday as more-than-expected drop in retail sales and downbeat outlooks for big banks exacerbated worries about the economy.Tumbling banking sector led the Standard & Poor’s financial index down 4.9 percent. All 30 Dow components lost ground.

Deutsche Bank AG, Germany’s biggest bank, reported a record loss of 4.8 billion euros ($about 6.3 billion) in the fourth quarter.

Morgan Stanley said that HSBC Holdings, Europe’s largest bank by market value, may have to raise $30 billion and cut the dividend in half.

Citigroup, which closed a deal with Morgan Stanley on Tuesday on a new joint venture on brokerage, tumbled 14 percent Wednesday. Investors are worried that Citigroup still needs to raise more capital. Citigroup is estimated to report an operating loss of $10 billion in the fourth quarter.

A government report released Wednesday showed that consumer spending contracted much more than the market had predicted. The US Commerce Department reported that retail sales dropped 2.7 percent in December 2008, more than double the 1.2 percent decline that Wall Street had expected.

It is the record sixth straight monthly decline, as American consumers cut back on spending due to credit crunch and job losses. The dismal retail sales plagued investors, because consumer spending accounted for more than two third of the nation’ s economy.

Crude oil fell more than 5 percent to $35.72 a barrel on the New York Mercantile Exchange as the concern over slumping demand weighed on the market. Energy shares went lower.

The Dow Jones fell 248.42, or 2.94 percent, to 8,200.14. Broader indexes also went down sharply. The Standard & Poor’s 500 index slipped 29.17, or 3.35 percent, to 842.62; and the Nasdaq tumbled 56.82, or 3.67 percent, to 1,489.64.

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