The Wall Street Journal-20080118-BlackRock- BorgWarner Post Gains
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BlackRock, BorgWarner Post Gains
With all of the Dow Jones Industrial Average's gains from last year wiped out, Merrill Lynch, Ambac Financial and Ben Bernanke reminded investors of the plights threatening the more than five-year-old bull market.
Merrill plunged $5.64, or 10%, to $49.45, after the brokerage booked hefty write-downs related to mortgage and other credit markets, and posted the largest loss in its history.
Among other major banks, Citigroup fell 1.28, or 4.9%, to 24.96 and set a 52-week intraday low.
Ambac Financial plummeted 6.73, or 52%, to 6.24, and MBIA shed 4.18, or 31%, to 9.22. Moody's Investors Service and Standard & Poor's signaled new consideration of the two largest U.S. bond guarantors' triple-A ratings. Problems at Channel Reinsurance, a Bermuda-based reinsurer that took on more than $8 billion of risks from the bond insurer, have sparked concern that MBIA may have to take back some of the risks it unloaded onto the Bermuda firm, and set aside more capital.
MGIC Investment fell 2.28, or 14%, to 13.49. Home construction in the U.S. slowed to its lowest level in 16 years, a further weakening of the mortgage insurer's core market, even as homeowners struggle to make existing payments.
Lehman Brothers Holdings fell 3.40, or 5.9%, to 54.66 after the Wall Street investment bank warned it was cutting employees and shutting down its mortgage-warehousing unit as it substantially reduces mortgage operations.
BlackRock tacked on 1.25 to 204.95. Driven by client fees, fourth- quarter profit rose sharply for the money manager, whose largest shareholder is Merrill Lynch.
All 30 Dow components finished in the red when the Dow dropped 306.95 points, as selling spread to defensive areas that typically persevere through thick and thin.
Among drug makers, Merck slid 3.48, or 6%, to 54.87. Congress is investigating advertising for the cholesterol-fighting drug Vytorin after a study suggested the pill may offer no advantage over generic anticholesterol drugs. Shares of Merck's partner on that drug, Schering-Plough fell 1.87, or 8%, to 21.62.
After holding up early in the session, tobacco company Altria Group fell 1.11, or 1.4%, to 76.80; Coca-Cola shed 61 cents, or 1%, to 62.04.
Harley-Davidson slid 2.68, or 6.8%, to 36.95 after Citigroup cut its rating on the maker of "hogs," the iconic motorbikes, to "sell" from "hold," bracing for a skid in U.S. sales.
Market watchers continue to debate whether growth overseas can compensate for a slowdown in the U.S.
Auto-parts maker BorgWarner rose 2.78, or 6.7%, to 44.42 after issuing a revved-up 2008 sales projection, reflecting Asian demand. Among other parts manufacturers, Lear rose seven cents to 23.95.
A few technology stocks, which are often less dependent on U.S. growth than other sectors, found buyers.
Sun Microsystems rose 40 cents, or 2.6%, to 15.93 after the software developer, which recently bought an "open-source" software specialist, reiterated its 2008 revenue outlook.
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Anna Wilde Mathews contributed to this article.
