U.S. Stocks Fall on Banking Outlook, Durable Goods Orders Slump

U.S. stocks fell for the first time in four days on a worsening outlook for bank profits, an unexpected drop in durable goods orders and concern that financing for buyouts will collapse.

Citigroup Inc. tumbled the most in the Dow Jones Industrial Average after Oppenheimer & Co.'s Meredith Whitney said the largest U.S. bank's first-quarter loss will be four times bigger than previously forecast. General Electric Co. and United Technologies Corp. declined on the worst-ever slump in machinery demand. Clear Channel Communications Inc. posted its steepest drop in 19 years on concern banks will pull loans for the broadcaster's $19.5 billion takeover.

The Standard & Poor's 500 Index lost 15.69, or 1.2 percent, to 1,337.3 at 10:51 a.m. in New York. The Dow decreased 144.83, or 1.2 percent, to 12,387.77. The Nasdaq Composite Index declined 33.52, or 1.4 percent, to 2,307.53. Four stocks fell for every one that rose on the New York Stock Exchange.

``The challenges and headwinds financials face now are many and have direct implications for the average consumer,'' said Michael Barron, chief executive officer and portfolio manager at Knott Capital Management in Exton, Pennsylvania, which oversees $1 billion. The drop in durable goods orders is ``yet another indication that the economy is in a recession.''

Nine of 10 S&P 500 industry groups fell following the unexpected 1.7 percent decline in orders for goods meant to last several years in February. The S&P 500 is down 14 percent from its Oct. 9 record after banks around the world racked up $195 billion in credit losses and writedowns from mortgage debt since the beginning of 2007.

European shares fell, while Asia's regional benchmark index climbed for a fourth day.

'Further Downside'

Citigroup lost $1.15, or 4.9 percent, to $22.27. Whitney cut her full-year estimate to a loss of 15 cents a share from profit of 75 cents to reflect potential first-quarter writedowns on leveraged loans and collateralized debt obligations of $13.1 billion. In the first quarter, the bank may lose $1.15 a share, compared with an earlier loss estimate of 28 cents, she said.

As ``the U.S. consumer comes under increasing pressure, we anticipate further downside to both estimates and stock prices,'' Whitney wrote in a report dated yesterday.

Bank of America Corp. fell 97 cents, or 2.4 percent to $40. Goldman Sachs Group Inc. analysts reduced their earnings-per- share estimate for this year to $3.35 from $4.05, citing an estimated $3 billion first-quarter writedown.

GE, the world's third-largest company by market value, slipped 34 cents to $36.93. United Technologies, the maker of Otis elevators and Chubb security systems, dropped 84 cents to $69.32.

Clear Channel LBO

Clear Channel plunged $5.93, or 18 percent, to $26.63 for the biggest decline in the S&P 500. The Wall Street Journal said banks financing the deal for Thomas H. Lee Partners LP and Bain Capital LLC haven't been able to agree with the buyers on terms. The report cited unidentified people familiar with the matter.

Lehman Brothers Holdings Inc. cut its price estimate on the stock by 36 percent to $25.

Jabil Circuit Inc., the maker of phones for Nokia Oyj and electronics for Hewlett-Packard Co., declined $2.11 to $9.27 after third-quarter and full-year profit and sales forecasts trailed analysts' estimates. JPMorgan Chase & Co. downgraded the stock to ``underweight'' from ``overweight.''

Motorola Inc., the biggest U.S. maker of mobile phones, climbed 15 cents to $9.91 after announcing plans to split into two publicly traded companies. One company will focus on handsets and the other will sell broadband networking devices, according to a PR Newswire statement.

Sprint Nextel Corp. rose 36 cents, or 5.6 percent, to $6.78. Comcast Corp. and Time Warner Cable Inc., the two largest U.S. cable providers, are discussing providing funding for a new wireless company run by Sprint Nextel and Clearwire Corp., the Wall Street Journal reported, citing people familiar with the talks. Clearwire rose $1.62, or 12 percent, to $15.01.

Most U.S. stocks rose for a third day yesterday as a rally in commodity producers helped the market overcome weakening consumer confidence and a record drop in home prices.