Wall Street Retreats Sharply

Wall Street retreated Monday as major financial firms rekindled investors' concerns about the economic slowdown and the credit crisis.

The U.S. Institute for Supply Management reported that the ISM manufacturing index rose to 49.6 from 48.6 in April, showing U.S. manufacturers saw their businesses contract further and the economy is continuing on a sluggish pace of growth.

Meanwhile, the U.S. Commerce Department reported that construction activity fell by 0.4 percent in April after having been down 0.6 percent in March, as home building continues more than two-year slide.

Investors also attached attention to financial sector Monday. Wachovia, the U.S. fourth-largest bank, said early Monday that the company's board ousted CEO Ken Thompson. And Washington Mutual Inc. said it is replacing chief executive Kerry Killinger as chairman.

Standard & Poor's Ratings Services lowered ratings on Monday for three major U.S. investment banks on concerns of more write- offs.

The rating agency cut both Lehman and Merrill to A from A+ and dropped Morgan to A+from AA-. It gave each of the three a negative outlook.

The rating agency said it may cut ratings on Bank of America and JPMorgan Chase Co. because the weak economy is hurting consumer lending operations and mortgage losses may increase at those banks.

The Dow Jones industrial average fell 134.50, or 1.06 percent, to 12,503.82. The blue chip index had shed more than 200 points during the session.

The S&P 500 index fell 14.71, or 1.05 percent, to 1,385.67. The Nasdaq composite index fell 31.13, or 1.23 percent, to 2,491.53.



 



Source: CRIEnglish