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By Jennifer Yousfi
Banking shares slumped, taking the rest of the market with them, after another analyst reduced first-quarter profit expectations for financial firms.
At noon ET today (Thursday), the three major U.S. stock indices had all posted losses. The blue-chip Dow Jones Industrial Average Index had a decline of 111.69 points (-0.91%), to trade at 12,143.30. The tech-laden Nasdaq Composite Index slumped 16.05 points (-0.71%), to reach 2,256.76. And the broader Standard & Poor's 500 Index had a slip of 15.45 points (-1.16%), to settle at 1,318.25.
"It seems like there is no end to issues within the financial sector; it is the inability to stem the flow of negative news in terms of re-evaluating capital. … We're that much closer to zero now," Owen Fitzpatrick, head of U.S. equity group at Deutsche Bank AG (DB), told MarketWatch.
The financial (-1.72%) and transportation (-1.53%) sectors had the biggest declines. The only sector to post a gain at midday was the basic materials sector, up a scant 0.09%.
"It's a tough environment," Paul Rasplicka, who manages $4 billion at AIM Investments (IVZ), said in a Bloomberg Television interview in New York. "Lending terms are tighter. The willingness to extend credit is less. It's making it very tough for business."
Keefe, Bruyette & Woods Inc. analyst Lauren Smith lowered earnings expectations for several large Wall St. firms sending shares of Citigroup Inc. (C), Merrill Lynch & Co. Inc. (MER) and Goldman Sachs Group Inc. (GS) lower.
In Europe, the European Central Bank held interest rates steady to combat inflation, sending the major indices down again after a brief respite yesterday (Wednesday). The Paris-based CAC40, London's FTSE 100, Madrid's IBEX 35 and the Frankfurt-based DAX all posted declines.
At midday, the dollar had lost ground against the euro [down 0.586%], the yen [down .684%] and the pound sterling [down 0.911%].
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