U.S. Stocks Drop on Credit-Market Concern ?

By Eric Martin
Aug. 20 (Bloomberg) -- U.S. stocks fell on concern that last week's cut in the Federal Reserve's discount rate isn't enough to stem losses in credit markets.
Thornburg Mortgage Inc., the lender forced to stop taking home-loan applications earlier this month, retreated after saying it sold $20.5 billion of mortgage-backed securities at a loss. Financial shares posted the steepest decline in the Standard & Poor's 500 Index, led by Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. Exxon Mobil Corp. and Chevron Corp. dropped after the price of oil fell.
The S&P 500 slipped 11.34, or 0.8 percent, to 1,434.60 at 12:16 p.m. in New York. The Dow Jones Industrial Average lost 64.95, or 0.5 percent, to 13,014.13. The Nasdaq Composite Index decreased 12.85, or 0.5 percent, to 2,492.18.
``A number of risks still remain, including troublesome credit markets,'' said Michael Malone, trading analyst at Cowen & Co. in New York. ``There's still a fair amount of leverage throughout the global financial system. We're not out of the woods yet.''
Today's drop follows the S&P 500's biggest rally in four years after the Fed lowered its discount lending rate on Aug. 17 and said it will ``act as needed'' to keep credit market losses from spreading. Today, European stocks climbed and Asian markets, open for the first time since the Fed's move, rose the most in three years.

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