US stocks retreat as banks, Hewlett-Packard shares slump
Friday, 22 May 2009
NEW YORK, May 21 (Bloomberg): US stocks retreated, erasing gains in the final hour of trading for a second day, as the Federal Reserve predicted a deeper recession and concern grew that credit-card issuers will be hurt by new lending restrictions.
Benchmark indexes slid as minutes from the Fed's April meeting showed policy makers believe they may need to boost purchases of bonds to ensure a stronger economic recovery. Capital One Financial Corp. lost 7.2 per cent as American Express Co. said US legislation to curb credit-card fees may reduce lending to "consumers who need it." Hewlett-Packard Co. dropped 5.2 per cent on a disappointing sales forecast.
The Standard & Poor's 500 Index slipped 0.5 per cent to 903.47 at 4:09 p.m. in New York, reversing a rally of as much as 1.8 per cent. The Dow Jones Industrial Average lost 52.81 points, or 0.6 per cent, to 8,422.04. The MSCI Asia Pacific Index rose 0.9 per cent, while Europe's Dow Jones Stoxx 600 Index added 0.5 per cent.
"The Fed governors debating whether or not they would need to purchase additional Treasuries would be a sign the economy remains weak," said Peter Jankovskis, who helps manage $1.2 billion at Oakbrook Investments in Lisle, Illinois. "The American Express story is playing into it as well. If credit card companies are going to start cutting back on the availability of credit, it's going to be difficult to sustain the growth of personal consumption."
The market's earlier rally came as higher oil and metal prices boosted commodity shares and Bank of America Corp. raised $13.5 billion in a share sale. US stocks declined yesterday after Moody's Investors Service said commercial property values plunged and the government reported that housing starts slid to a record low. The S&P 500 is still up 33 per cent since March 9 on speculation the global recession is easing.
Financial stocks reversed earlier gains today after American Express, the third-largest credit-card network, said growth won't return to levels from before the downturn in the economy. Kenneth Chenault, the company's chief executive officer, said that while US legislation to curb credit-card fees may reduce lending to "consumers who need it," the measure will hurt competitors more than his company.
Capital One, the Virginia-based credit-card lender, slid 7.2 per cent to $23.11. American Express lost 3.3 per cent to $23.98.
President Barack Obama plans to sign legislation to curb credit-card fees and marketing practices that legislators have called deceptive, White House spokesman Robert Gibbs said. Card companies said the new law may reduce profit, increase costs for customers and reduce perks.
Regions Financial Corp. fell 6.7 per cent to $4.89. The largest Alabama bank said it began selling $1 billion of common shares and $250 million of new mandatory convertible preferred shares after the government said it needs $2.5 billion to weather a worsening recession.
Bank of America, the biggest US lender by assets, raised money in a stock offering after regulators determined it needed more cash to weather an extended recession. Bank of America issued 1.25 billion shares at an average price of $10.77 each, according to a statement yesterday. The shares climbed 2.1 per cent to $11.49.
Benchmark indexes slid as minutes from the Fed's April meeting showed policy makers believe they may need to boost purchases of bonds to ensure a stronger economic recovery. Capital One Financial Corp. lost 7.2 per cent as American Express Co. said US legislation to curb credit-card fees may reduce lending to "consumers who need it." Hewlett-Packard Co. dropped 5.2 per cent on a disappointing sales forecast.
The Standard & Poor's 500 Index slipped 0.5 per cent to 903.47 at 4:09 p.m. in New York, reversing a rally of as much as 1.8 per cent. The Dow Jones Industrial Average lost 52.81 points, or 0.6 per cent, to 8,422.04. The MSCI Asia Pacific Index rose 0.9 per cent, while Europe's Dow Jones Stoxx 600 Index added 0.5 per cent.
"The Fed governors debating whether or not they would need to purchase additional Treasuries would be a sign the economy remains weak," said Peter Jankovskis, who helps manage $1.2 billion at Oakbrook Investments in Lisle, Illinois. "The American Express story is playing into it as well. If credit card companies are going to start cutting back on the availability of credit, it's going to be difficult to sustain the growth of personal consumption."
The market's earlier rally came as higher oil and metal prices boosted commodity shares and Bank of America Corp. raised $13.5 billion in a share sale. US stocks declined yesterday after Moody's Investors Service said commercial property values plunged and the government reported that housing starts slid to a record low. The S&P 500 is still up 33 per cent since March 9 on speculation the global recession is easing.
Financial stocks reversed earlier gains today after American Express, the third-largest credit-card network, said growth won't return to levels from before the downturn in the economy. Kenneth Chenault, the company's chief executive officer, said that while US legislation to curb credit-card fees may reduce lending to "consumers who need it," the measure will hurt competitors more than his company.
Capital One, the Virginia-based credit-card lender, slid 7.2 per cent to $23.11. American Express lost 3.3 per cent to $23.98.
President Barack Obama plans to sign legislation to curb credit-card fees and marketing practices that legislators have called deceptive, White House spokesman Robert Gibbs said. Card companies said the new law may reduce profit, increase costs for customers and reduce perks.
Regions Financial Corp. fell 6.7 per cent to $4.89. The largest Alabama bank said it began selling $1 billion of common shares and $250 million of new mandatory convertible preferred shares after the government said it needs $2.5 billion to weather a worsening recession.
Bank of America, the biggest US lender by assets, raised money in a stock offering after regulators determined it needed more cash to weather an extended recession. Bank of America issued 1.25 billion shares at an average price of $10.77 each, according to a statement yesterday. The shares climbed 2.1 per cent to $11.49.