Wall Street falls on banks' profit view, oil's jump

Wall Street falls on banks' profit view, oil's jump

By Cal Mankowski 28 minutes ago,YAHOO.

NEW YORK (Reuters) - Stocks tumbled on Wednesday, with all three indexes down 1 percent, as surging oil prices raised fears about slower consumer spending while financial shares sank after a prominent analyst said there was no end in sight to a drop in bank profits.
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News that banks' increasing reluctance to provide credit may derail a $20 billion leveraged buyout of U.S. radio and TV station operator Clear Channel Communications Inc (CCU.N) also dampened sentiment, while Deutsche Bank (DBKGn.DE) warned that the global credit crisis could hit its 2008 profits.

"There is still a very low level of confidence in the stock market," said Hugh Johnson, chief investment officer at Johnson Illington Advisors in Albany, New York. "There is a very low level of confidence that the crisis will end and the economy will recover."

The Dow Jones industrial average (.DJI) was down 130.91 points, or 1.04 percent, at 12,401.69. The Standard & Poor's 500 Index (.SPX) was down 14.20 points, or 1.05 percent, at 1,338.79. The Nasdaq Composite Index (.IXIC) was down 29.21 points, or 1.25 percent, at 2,311.84.

Financial stocks were the biggest drags on the S&P 500 after Oppenheimer & Co analyst Meredith Whitney lowered her first-quarter profit forecasts for Citigroup, Bank of America Corp (BAC.N), JPMorgan, and Wachovia Corp (WB.N).

Citigroup Inc (C.N) fell 5 percent to $22.15, Bank of America shed 2.4 percent to $39.98, and JPMorgan Chase & Co (JPM.N) lost 3 percent to $44.74.

"The reason the financials are down are because of Deutsche Bank talking negative about its 2008 forecast," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles, adding that Whitney's note also had an impact.

Energy shares climbed as U.S. oil futures jumped nearly $4 to $105.20 a barrel after new data showing a sharp decline in gasoline inventories.

Exxon Mobil Weaker-than-expected data on U.S. durable goods orders showed a key gauge of companies' appetite for investment shrank in February, raising new concern about a weakening economy.

The Dow Jones index U.S. home builders (.DJUSHB) fell nearly 5 percent, while the S&P's index of financial shares (.GSPF) dropped 3.2 percent.

Shares of Clear Channel plummeted almost 16 percent to $27.43 and ranked near the top of the biggest percentage losers on the New York Stock Exchange.

Motorola Inc (MOT.N) said it will split into two publicly traded companies, separating its money-losing handset division from other businesses. Shares rose 2.5 percent to $9.99.

(Additional reporting by Justin Grant; Editing by Jan Paschal)