Stocks Slip on Oil, Mortgage Concerns

U.S. stocks fell Monday after oil prices rose and a General Motors executive said the crisis in U.S. mortgage lending hurt U.S. auto sales this month, stirring concerns of an even wider economic impact.

The Dow Jones industrial average was down 42.58 points, or 0.33 percent, at 12,919.40. The Standard & Poor's 500 Index was down 3.42 points, or 0.23 percent, at 1,480.93. The Nasdaq Composite Index was down 2.72 points, or 0.11 percent, at 2,523.67.

Earlier, the Dow industrials hit an intraday record high of 12,983.92, but failed to breach the milestone of 13,000 as sentiment turned on rising fears of the impact of the housing market problems.

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Also on Monday, ratings agency Moody's Investors Service said that losses from risky subprime loans may go beyond original forecasts.

"The question is, Will the subprime market mess have an effect on consumer spending?" said Michael James, senior trader at Wedbush Morgan in Los Angeles. "And oil is going through the $65 level — that's going to potentially cause increasing uneasiness in the next few days."

He said concerns about the wider impact of problems in the subprime mortgage market that serves the riskiest borrowers helped to push down retail stocks, such as Wal-Mart, which was one of the biggest drags on the Dow.

Shares of Dow component General Motors Corp. (GM) fell 3.19 percent to $30.67 and were the biggest drag on the Dow, after Vice Chairman Bob Lutz said the crisis in the U.S. mortgage market has hurt U.S. auto sales this month, citing "reduced affordability."

Prudential cut its rating on shares of drug maker Pfizer Inc. (PFE), and Deutsche Bank downgraded oil company Exxon Mobil Corp.(XOM). The fall in the two Dow components dragged on the average.

Shares of Pfizer, the world's biggest drug maker, fell 2.3 percent to $26.35, and Exxon shares were down 0.7 percent at $79.20. Wal-Mart's shares were down 1.67 percent at $48.93.

In deal news, biotechnology was a top-performing sector after Anglo-Swedish drug maker AstraZeneca agreed to buy U.S. biotech company MedImmune Inc. for more than $15 billion.

MedImmune stock shot up 17.8 percent to $56.57 on the Nasdaq.

Bank of America agreed to buy ABN Amro's Chicago-based U.S. bank, LaSalle Bank Corp. The deal is contingent upon British bank Barclays buying its Dutch rival ABN AMRO. Bank of America fell 1 percent to $50.53.

Large brokerages rose after Merrill Lynch boosted its ratings on Morgan Stanley, Goldman Sachs Group Inc. , Lehman Brothers Holdings Inc. and Bear Stearns Cos. Inc..

Shares of Goldman gained 1.1 percent to $222.42, and Bear Stearns added 0.45 percent to $157.30. Morgan Stanley stock was up 0.78 percent to $83.56. Lehman shares were down 0.41 percent to $77.82.

U.S. crude oil futures rose a dollar to $65.11 per barrel, lifted as oil markets watched the aftermath of presidential elections in Nigeria, the world's eighth largest oil exporter.

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