U.S. stocks ended lower today, pressured by financial issues after Moody’s Investors Service downgraded the insurance strength rating of top monoline insurers MBIA Insurance Corp. and Ambac Financial Group Inc. because of their structured debt exposure. MBIA’s rating dropped to A2 from Aaa while Ambac’s rating dropped to Aa3 from Aaa.
The Dow Jones industrial average closed down 220.40, or -1.83%, at 11,842.69; the S&P 500 fell 24.90, or -1.85%, ending at 1,317.93; and the Nasdaq composite closed down 55.97, or -2.27%, at 2,406.09. All numbers are preliminary.
Today was the first time the Dow closed below 12,000 since March 17, when JPMorgan Chase & Co.’s takeover offer saved Bear Stearns Cos. The index has lost more than 10% since the beginning of the year. Adding to the financial gloom was talk that banks and brokerage firms may still be feeling the impact of the subprime debacle. Analysts at UBS slashed their forecast for second-quarter earnings at Citigroup Inc. after the bank warned of more write-downs. The market’s decline took place on “triple-witching” Friday — the Friday of the third week of the last month of the quarter — when major financial futures contracts expire simultaneously.
Crude oil prices also rose on reports that Israel was planning an attack on Iran’s nuclear facilities, prompting threatening comments from Tehran. “Israel has carried out an exercise that appears to have been a rehearsal for an attack on Iran’s nuclear facilities,” said Robert Brusca, chief economist at New York consultancy FAO Economics.
