US STOCKS-Credit worries, GM strike weigh on Wall St 25 Sep 2007 05:07
(Updates close with Lowe's shares down after the bell in 7th paragraph)
By Caroline Valetkevitch
NEW YORK, Sept 24 (Reuters) - U.S. stocks fell on Monday as financial shares weakened on news that Germany's largest bank may take a big hit from subprime mortgage investments, while a landmark strike at General Motors raised concern about the economic outlook.
Citigroup <C.N> and other banks fell after sources familiar with the situation said that exposure to risky U.S. home loans could reduce Deutsche Bank's profit by $2.4 billion. For details, see [ID:nL24402893].
"It will be a mistake to assume that all the problems in the subprime mortgage market are behind us. I think some of the news about Deutsche Bank today provided us with a reminder of that," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.
The first nationwide strike by autoworkers in 37 years further clouded the outlook for industrial companies. Suppliers of auto parts fell, led by a 3 percent drop in Lear Corp <LEA.N> and a nearly 2 percent fall in Johnson Controls Inc. <JCI.N>. GM edged down.
Some 73,000 workers in the United Auto Workers union went on strike against GM beginning on Monday as negotiators for a new contract were bargaining over the company's proposed cuts in health-care costs and union demands to keep U.S. production jobs.
The Dow Jones industrial average <.DJI> finished the day down 61.13 points, or 0.44 percent, at 13,759.06. The Standard & Poor's 500 Index <.SPX> ended down 8.02 points, or 0.53 percent, at 1,517.73. The Nasdaq Composite Index <.IXIC> was down 3.27 points, or 0.12 percent, at 2,667.95.
After the close, shares of Lowe's Companies Inc. <LOW.N> declined 3.4 percent as the home improvement retailer said it expects full-year profit at the low end or below its previous forecast. For details, see [ID:nWEN1218]. Shares were down at $29.50 in electronic trade after closing at $30.55.
During the regular session, shares of energy companies also declined as oil prices edged lower. Exxon Mobil Corp. <XOM.N> shares finished down 0.6 percent at $91.73.
November crude oil <CLX7> fell 67 cents to settle at $80.95 per barrel on the New York Mercantile Exchange as energy companies in the Gulf of Mexico began restoring output shut by a storm.
In the GM strike, talks between negotiators for the automaker and the UAW resumed by Monday afternoon, a GM spokeswoman said.
Analysts said the strike could hurt auto parts suppliers if it drags on. Fitch Ratings said late on Monday it may cut its debt ratings on GM, as well as its ratings on several auto suppliers.
GM shares slipped 0.6 percent to end down at $34.74 after trading higher for most of the session. Shares of Lear declined 2.7 percent to $32.04, while shares of Johnson Controls fell 1.8 percent to $114.97.
In the financial sector, Citigroup fell 1.9 percent to $46.59, while U.S.-traded shares of Deutsche Bank <DBKGn.DE> <DB.N> slid 2.3 percent to $126.34. The S&P index of financial shares <.GSPF> was down 1.2 percent at 458.73.
Stocks were higher earlier in the day amid an advance in technology stocks.
Microsoft Corp. <MSFT.O> and Apple Inc. <AAPL.O> rose as investors bet the recent cut in interest rates would keep the economy growing and spur business spending. The Federal Reserve cut benchmark interest rates by a half percentage point last Tuesday.
Microsoft finished up 1.5 percent at $29.08, and Apple ended up 2.87 percent at $148.28.
Trading was below average on the New York Stock Exchange, with about 1.35 billion shares changing hands against last year's estimated daily average of 1.84 billion. On Nasdaq, about 1.91 billion shares traded, below last year's daily average of 2.02 billion.
Declining stocks outnumbered advancing ones by a ratio of about 5 to 3 on the NYSE and 3 to 2 on Nasdaq. ((Reporting by Caroline Valetkevitch
Editing by Jonathan Oatis;
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