U.S. stocks fell, extending Standard & Poor’s 500 Index losses from last week, amid concern American lawmakers will fail to reach a deal on the nation’s debt limit two weeks before a deadline.
News Corp. dropped 3.6 percent after two people familiar with the matter said independent directors are questioning whether a leadership change is needed because of a phone-hacking scandal. Citigroup Inc. (C) and Bank of America Corp. (BAC) retreated at least 0.6 percent as European lenders slumped. LinkedIn Corp. slid 3.6 percent after JPMorgan Chase & Co. cut its rating. Halliburton Co. (HAL) rose 1.2 percent after beating profit estimates.
The S&P 500 lost 0.6 percent to 1,308.79 at 9:34 a.m. in New York. The Dow Jones Industrial Average slumped 81.14 points, or 0.7 percent, to 12,398.59. A default by the U.S. would cause more panic than the collapse of Lehman Brothers Holdings Inc. in 2008, former Treasury Secretary Larry Summers told CNN in an interview broadcast yesterday.
“It looks like more partisan fighting is delaying any debt-ceiling resolution,” Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc. in Boston, wrote in an e-mail. “Words being thrown around like ‘catastrophe and Armageddon’ are certainly not soothing investors confidence.”
House Speaker John Boehner, a Republican from Ohio, said his party wouldn’t accept any tax increases as he worked on a deal to lower the deficit. As negotiators near the Aug. 2 deadline for raising the $14.3 trillion U.S. debt ceiling, President Barack Obama, a Democrat, is pushing to close tax loopholes for the richest Americans and corporations and cut discretionary spending by government.
S&P 500’s Tumble
The bankruptcy of Lehman Brothers prompted the biggest collapse of global financial markets since the Great Depression. It drove the S&P 500 down 46 percent between September 2008 and March 2009. The index dropped 2.1 percent last week amid concern the debt crisis in Europe is spreading and American lawmakers are putting the nation’s top credit rating in jeopardy.
More than 100 companies in the S&P 500 are scheduled to report quarterly results this week, including International Business Machines Corp. today, according to data compiled by Bloomberg. Among the 15 that posted results since July 11, 12 percent beat the average analyst estimate for per-share profit, data compiled by Bloomberg show.
News Corp. (NWSA) slumped 3.6 percent to $15.08. Rupert Murdoch is struggling to control the destiny of the company he began building six decades ago after a trusted deputy was arrested and Scotland Yard’s top official quit.
Citigroup fell 0.6 percent to $38.16. Bank of America decreased 1.2 percent to $9.88. European leaders are holding a special summit this week as they seek to contain the debt crisis, after eight of the region’s banks failed stress tests.
LinkedIn fell 3.6 percent to $106.01 after JPMorgan cut its rating to “neutral” from “overweight.” The website focused on job seekers and recruiters has more than doubled since the shares began trading in May, and JPMorgan said it downgraded the stock based on “valuation rather than fundamental concerns.”