The Wall Street Journal-20080205-Wells Fargo- Google Fall- Yahoo Rises
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Wells Fargo, Google Fall; Yahoo Rises
Full Text (572 words)U.S. stocks slid as brokerage downgrades for American Express and Wells Fargo revived worries about consumers and financial institutions.
"It appears there are lingering concerns after the recent Federal Reserve rate cut that credit issues may still be with us," said Steve Neimeth, portfolio manager with AIG SunAmerica Mutual Funds. "Unfortunately, these issues are likely to linger for the next three quarters as a result of the cycle of adjustable-rate mortgages being repriced."
AmEx fell $1.94, or 3.9%, to $47.66 after UBS cut its rating on the credit-card provider to "sell" from "buy," warning that rising unemployment related to an anticipated recession would lead to more losses on consumer credit. Among other card providers UBS downgraded, Capital One Financial fell 4.32, or 7.6%, to 52.65.
A slide for AmEx and another major lender, J.P. Morgan Chase -- off 2.03, or 4.2%, to 46.22 -- helped the Dow Jones Industrial Average fall 108.03, or 0.85%, to 12635.16.
Wells Fargo fell 2.26, or 6.7%, to 31.39 after Stifel Nicolaus cut its rating on the bank, saying the Fed-induced rally was overdone, given the potential for more credit-market losses.
But the Nasdaq Composite took the brunt of the selling, falling 30.51, or 1.26%, to 2382.85.
Google fell 20.47, or 4%, to 495.43 on the Nasdaq. Goldman Sachs removed the Internet-search giant from its "Favorite Growth" list after a recent slide in the stock price, which is less than $60 from its 52-week low of 437. Google's chief executive offered to help Yahoo thwart Microsoft's bid to take over the company.
Among other Nasdaq components, Apple declined 2.10, or 1.6%, to 131.65. Morgan Stanley warned that earnings expectations for technology companies are overly optimistic, given the environment.
Yahoo rose 95 cents, or 3.4%, to 29.33 on the Nasdaq. In an email to employees, the search engine's management said Microsoft's bid was "one of many options" it is evaluating.
Walt Disney rose 24 cents, or 0.8%, to 30.90 after reports that Hollywood writers may be close to signing a deal to end their strike.
American depositary shares of Ryanair Holdings (Nasdaq) fell 2.75, or 8.3%, to 30.47 after the Irish discount airline warned its profit for next fiscal year could fall by as much as 50% because of high fuel prices and waning demand for tickets.
Archer Daniels Midland declined 1.30, or 2.9%, to 44.20 after the agricultural giant said fiscal-second-quarter margins were squeezed by higher corn costs and lower ethanol prices.
Sara Lee rose 22 cents, or 1.6%, to 14.42. Bear Stearns boosted its rating on the maker of Jimmy Dean sausages and other foods to "peer perform" from "underperform," warning off short sellers because an activist investor may trump higher commodity costs.
UST rose 2, or 3.6%, to 57 after Goldman Sachs said there was a "decent likelihood" of tobacco maker Altria buying the maker of snuff.
Urban Outfitters fell 1.27, or 4.4%, to 27.73 on the Nasdaq as investors approached same-store-sales reports Thursday with trepidation. Still, Morgan Keegan said the youth-clothing store may fare better than other retailers in a tough environment.
Wendy's International gave back 1.25, or 5%, to 23.93 after the fast-food chain warned growth in one profit metric would likely come in near the low end of Wall Street estimate ranges. "Consumer nervousness about the economy" and rising commodity costs were among the factors.
Rival McDonald's shed 34 cents to 53.88.
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Quentin Fottrell and Rod Stone contributed to this article.
