* Financials lead losses on credit worries
* JPMorgan incurs losses of $1.5 bln so far in Q3
* Oil falls $1 to about $113/barrel, cushions market's fall
* Dow off 0.7 pct, S&P 500 off 0.6 pct, Nasdaq dips 0.1 pct
(Updates to midday)
By Walter Brandimarte
NEW YORK, Aug 12 (Reuters) - Renewed credit concerns
knocked down shares of the major U.S. banks on Tuesday,
driving the Dow and S&P 500 lower, and offsetting a decline of
$1 in the price of the barrel of U.S. crude oil.
JPMorgan Chase & Co's <JPM.N> shares slumped nearly 7
percent, becoming the biggest drag on both the Dow and the S&P
500, after the third-largest U.S. bank said it had taken
another $1.5 billion of write-downs in the current quarter to
date. For details, see []
The JPMorgan news suggested the fallout from the housing
downturn is far from over, weighing on the entire financial
sector. Citigroup <C.N> lost over 3 percent and Bank of
America <BAC.N> fell 3 percent.
Shares of Goldman Sachs <GS.N>, which also received
negative comments from analysts, dropped nearly 5 percent.
Wachovia <WB.N> sank almost 9 percent after it increased its
previously reported second-quarter loss. []
The JPMorgan report makes the point that "the credit
market still remains volatile," said Chris Hensen, senior
portfolio manager at U.S. Equities MFC Global Investment
Management in Toronto.
"It's $1.5 billion in losses just since July, so it shows
that these debt instruments continue to decline in value.
There are still some pressures there."
The Dow Jones industrial average <> fell 86.22 points,
or 0.74 percent, to 11,696.13, while the Standard & Poor's 500
Index <.SPX> lost 8.41 points, or 0.64 percent, to 1,296.91.
The Nasdaq Composite Index <> declined 3.22 points, or
0.13 percent, to 2,436.84.
JPMorgan shares slid 6.8 percent to $39.05, Citigroup
shares fell 3.6 percent to $19.09, and Bank of America
declined 3.2 percent to $32.31. The KBW bank index <.BKX> lost
3.5 percent, after gaining more 45 percent since its mid-July
lows.
Wachovia's stock tumbled 8.8 percent to $16.61 after the
fourth largest U.S. bank increased its previously reported
second-quarter loss late on Monday to $9.11 billion to cover
costs to settle a probe of auction-rate securities sales.
Goldman Sachs shares slipped 4.9 percent to $169.37,
following Deutsche Bank analyst Mike Mayo's downgrade of the
stock to a "hold" from a "buy." Credit Suisse cut its
earnings-per-share estimates for Goldman for both 2008 and
2009 and lowered its price target range for the stock as
well.
Also weighing on the financial sector was news that Swiss
bank UBS AG <UBSN.VX> posted a worse-than-expected
second-quarter loss, hurt by fresh write-downs and a wave of
client withdrawals. [] The U.S.-listed shares of
UBS <UBS.N> dropped 5.3 percent to $20.55.
Shares of McDonald's Inc <MCD.N> shed 1.6 percent to
$64.90, becoming one the top drags on the Dow, after UBS
downgraded its recommendation on the stock to "hold" from
"buy." []
But another decline in the price of oil helped cushion the
market's fall, leading the Nasdaq briefly into positive
territory earlier in the session. U.S. crude oil <CLc1> for
September delivery declined $1.00 to $113.45, as oil futures
fell for the third consecutive session.
Shares of Apple Inc. <AAPL.O> rose 2.2 percent to $177.38,
supporting the Nasdaq for the second consecutive session and
limiting the Nasdaq's decline, as lower oil prices gave
investors some reason for optimism about consumer spending.
(Editing by Jan Paschal)
