BEIJING, July 28 -- United States stocks dropped last week, resuming a
two-month slump, after home sales fell more than economists forecast and bond
investor Bill Gross predicted 1 trillion U.S. dollars of losses for banks and
brokerages.
Shares pared the decline, with the S&P 500
gaining 0.4 percent on better-than-forecast reports on durable goods orders,
consumer confidence and new-home sales, Bloomberg News said. For the week,
energy stocks in the Standard & Poor's 500 Index lost the most among 10
industries as crude oil decreased 4.8 percent and natural gas plunged the most
in 11 months. Washington Mutual, Fannie Mae and Freddie Mac drove the S&P
500 Financials Index to the biggest one-day plunge in eight years. Qualcomm Inc
surged after boosting 2008 sales and profit targets and settling a licensing
dispute with handset maker Nokia.
The S&P 500 slumped 0.2 percent to 1,257.76 last
week. The Dow Jones Industrial Average lost 1.1 percent to 11,370.69. The yield
on 10-year Treasuries rose to 4.10 percent from 4.09 percent.
All of the 23 developed nations in the MSCI World
Index except for Canada have experienced bear-market plunges of 20 percent or
more since September as credit losses surged and record commodity prices stoked
inflation. Brazil last week became the 23rd out of 25 developing countries in
the MSCI Emerging Markets Index to enter a bear market. Only Jordan and Morocco
avoided such slumps.
Stocks have declined since October as financial
institutions worldwide suffered 467.9 billion dollars in writedowns and credit
losses. That prompted economists to forecast 1.5 percent growth in the U.S.
economy in 2008, the slowest since 2001. Equities also suffered as inflation
increased, giving the U.S. consumer price index the steepest gain since 1991.
Financial shares in the S&P 500 tumbled 6.7
percent last Thursday, the most since April 2000, after sales of previously
owned US homes fell in June to the lowest level in a decade, signaling tumbling
real-estate prices and consumer confidence are hurting demand.
An S&P index of 15 homebuilders slumped 12
percent that day, its biggest drop yet. Resales dropped 2.6 percent to a lower
than the forecast 4.86 million annual rate from a 4.99 million pace the prior
month, the National Association of Realtors said. The median home price dropped
6.1 percent from June last year.
Gross, who manages the world's biggest bond fund,
said last Thursday that falling U.S. home prices will force financial firms to
write down 1 trillion dollars from their balance sheets, crimping bank lending
and sparking sales of assets.
A total of US$5 trillion of mortgage loans belong to
"risky asset categories," Gross of Pacific Investment Management said on the
firm's Website.
Washington Mutual, the biggest US savings and loan,
slumped 35 percent to 3.84 dollars last week on concern that the lender may need
to raise cash. Fannie Mae lost 14 percent to 11.55 dollars, and Freddie Mac
retreated 9.9 percent to 8.27 dollars. American Express decreased 13 percent to
36.62 dollars.
Crude oil dropped 4.3 percent to 123.30 dollars a
barrel in New York, extending its decrease this month to 16 percent.
Natural gas retreated 14 percent to 9.084
dollars per million British thermal units, bringing its drop over the past
three weeks to 33 percent.
(Source: Shanghai Daily)
