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Financials slam Wall Street; eBay drops late

US stocks fell yesterday, hurt by a late sell-off in financial shares after an influential bank analyst recommended selling Wells Fargo shares and a wider-than-expected loss from Boeing disappointed investors.

For most of the session, stocks had traded higher as the US dollar's weakness underpinned shares of natural resources companies, while results from Morgan Stanley and Yahoo Inc added to optimism about corporate profits.

Shares of Wells Fargo slid 5.1 percent to US$28.90 after Rochdale Research analyst Richard Bove cut his rating on the stock saying loan losses were mounting. The KBW bank indexdropped 2.4 percent.

"It just shows you how susceptible we are to bad news right now," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco. "We've got such an extended stock market that a feather of news is enough to cascade it down 100 points."

The Dow Jones industrial average dropped 92.12 points, or 0.92 percent, to end at 9,949.36. The Standard & Poor's 500 Index lost 9.66 points, or 0.89 percent, to 1,081.40. The Nasdaq Composite Index shed 12.74 points, or 0.59 percent, to 2,150.73.

The S&P 500 is up 60 percent from the 12-year closing low of early March.

Earlier in the day, Wells Fargo had been among several banks, including Morgan Stanley and US Bancorp, posting quarterly earnings above Wall Street's forecasts.

But the market took a turn for the worst in the last half-hour of the session, causing indexes to finish at their lows of the day. In the Dow, six of the 30 stocks rose, 22 fell, and two were unchanged.

Besides Wells Fargo, other notable casualties in the bank sector were JPMorgan, down 3 percent to US$44.65 and Bank of America, off 2.9 percent at US$16.51. But Morgan Stanley bucked the trend, ending up 4.8 percent at US$34.08 following its forecast-beating results.

Boeing shares dropped 2.4 percent to US$50.63 following a wider-than-expected quarterly loss from the aircraft maker.


Wal-Mart Stores shares lost ground, ending down 2.1 percent at US$50.63, after the world's largest retailer said it would slash prices as it readies for what is likely to be a tough holiday shopping season. The S&P consumer discretionaries index declined 1.5 percent.

After the bell, eBay Inc, the global e-commerce site, forecast fourth-quarter profit and revenue at the low end of analysts' estimates, quashing investors' hopes for a substantial turnaround at its main marketplaces division during the crucial holiday season.

In extended-hours trading, shares of eBay fell 5 percent to US$23.75.

In the regular session, biotechnology company Genzyme Corp was the Nasdaq's top drag after it posted lower-than-expected quarterly earnings and cut its 2009 outlook. The stock fell 6.2 percent to US$51.43.

On the positive side, Apple Inc hit an all-time intraday high, two days after the iPhone and MacBook computer maker posted earnings that eclipsed Wall Street's forecasts. Apple ended up 3.1 percent at US$204.92 -- a record close -- on Nasdaq, where it rose as high as US$208.71 earlier.

US front-month crude briefly hit US$82 a barrel on the New York Mercantile Exchange, while spot gold rose above US$1,060 an ounce as the euro soared above US$1.50 for the first time since August 2008. US December crude-oil futures, the new front-month contract, jumped 2.8 percent, or US$2.25, to settle at US$81.37 a barrel on the New York Mercantile Exchange.

Volume was moderate on the New York Stock Exchange, with 1.41 billion shares changing hands, below last year's estimated daily average of 1.49 billion. On the Nasdaq, about 2.60 billion shares traded, above last year's daily average of 2.28 billion.

On the NYSE and the Nasdaq, decliners beat advancers by a ratio of 2 to 1.


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