Stocks resumed their slide today as credit woes continued to pressure financial firms while the Mortgage Bankers Association said foreclosures reached an all-time high in the fourth quarter.
The Dow Jones industrial average closed down 214.60, or 1.75%, at 12,040.39; the S&P 500 fell 29.36, or 2.2%, ending at 1,304.34; and the Nasdaq composite closed down 52.31, or 2.3%, at 2,220.50. All numbers are preliminary.
The financial sector led the sell-off after Carlyle Capital Corp. said in a statement it did not meet margin requirements on four credit agreements and expects to receive at least one additional default notice. Also, Thornburg Mortgage said in a filing with the SEC that it failed to meet a $28 million margin call on a $320 million loan from JPMorgan Chase.
UBS declined to comment on a JPMorgan Chase analyst report saying the bank might have sold $24 billion of non-subprime mortgages at a steep discount.
Credit conditions are tightening again, and this is hurting a lot of participants, said David Resler, chief economist at Nomura Securities International.
Separately, data released by the Federal Reserve today showed net worth of U.S. households dropping by $532.9 billion in the fourth quarter 2007 compared to the prior quarter. The 0.9% drop to $57.72 trillion was the first decline since the first quarter 2002.