Financial Shares Put Brakes on the Market
Wall Street wilted Tuesday as investors awaiting next week's Federal Reserve meeting remained uneasy that the fallout from the slumping housing market could bring more bank losses and drag the economy into recession.</br></br>The Dow Jones industrial average fell 65.84, or 0.49 percent, to 13,248.73. The Standard & Poor's 500-stock index fell 9.63, or 0.65 percent, to 1462.79, and the Nasdaq composite index fell 17.30, or 0.66 percent, to 2619.83.</br></br>Retreating oil prices and signs of strength in non-financial industries could not keep the stock market from declining for a second consecutive day. Investors have tiptoed into December, which is usually a winning month on Wall Street; most expect lower rates after the Fed meets Tuesday, but the size of the cut is under debate.</br></br>Meanwhile, J.P. Morgan Chase downgraded major securities firms, warning that while further write-offs of bad mortgage debt might help the firms' stocks, longer-term concerns about their risk management might hurt their overall valuation. J.P. Morgan lowered its earnings estimates for some of Wall Street's biggest players: Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley.</br></br>Those investment banks and other financial companies fell, including Washington Mutual, Citigroup, Bank of America, Freddie Mac and Fannie Mae, and J.P. Morgan itself. The financial sector has been dragging on the broader market since the summer. A report by D.A. Davidson analysts said bank stocks are at three- to four-year lows.