Financial shares bring S&P 500 lower

The Standard & Poor's 500 Index fell for the first time in three days as a drop in profits at credit-card company Providian Financial Corp heightened concern more consumers will default on loans.

Wal-Mart Stores Inc and Home Depot Inc declined after retail sales tumbled last month, fueling worries a rebound in corporate profits could be delayed longer than expected. The NASDAQ Composite Index erased a 3 percent loss sparked by a report of anthrax in New York.

"You don't see panic selling, but people are pulling their buy orders and waiting to see what happens," said Leo Smith, head of trading at Putnam Investments, which manages US$400 billion.

"Any second [terrorist] incident would undermine the confidence of the individuals participating in the marketplace."

The S&P 500 dropped 5.78, or 0.5 percent, to 1,091.65, with declines in eight of its 11 industry groups. For the week, the index rose 1.9 percent.

The Dow Jones Industrial Average shed 66.29, or 0.7 percent, to 9,344.16. It gained 2.5 percent this week.

The NASDAQ advanced 1.93, or 0.1 percent, to 1,703.40, bringing its gain this week to 6.1 percent.

Each of the benchmark indexes has risen in the past three weeks, the first time that's happened in more than a year. With the gains, the NASDAQ has climbed 0.5 percent above its level prior to the Sept. 11 terrorist attacks.

The S&P 500 has fallen 0.1 percent below its pre-attack close, and the Dow has declined 2.7 percent lower than it was on Sept. 10.

More than 1.3 billion shares traded on the New York Stock Exchange, 4 percent above the three-month average. More than three stocks fell for every two that advanced on the Big Board. Six stocks declined for every five that advanced on the Nasdaq Stock Market.

Financial stocks tumbled on concern consumers will have trouble paying their bills.

Providian plunged US$6.90, or 34 percent, to US$13.45, its lowest price in almost four years. The No. 5 issuer of Visa and MasterCard credit cards set aside US$186 million in its third quarter for potential loan losses and took a charge of about US$85 million in anticipation of interest charges and fees it won't be able to collect. It also had higher-than-expected credit losses last month.

Capital One Financial Corp fell US$2.90 to US$44.80; Household International Inc shed US$2.06 to US$54.89; and Citigroup Inc, the largest financial services company, lost US$0.69 US$45.06. Bank of America Corp fell US$1.59 to US$53.01.

Retail stocks dropped after the Commerce Department said sales to consumers slumped 2.4 percent in September, their biggest drop in almost 10 years.

Home Depot, the largest home improvement chain, declined US$1.42 to US$41.68. Wal-Mart, the largest retailer, fell US$0.59 to US$52.90, and Target Corp slipped US$1.38 to US$31.67.

Investors and economists said they are eager for additional reports that will be a better gauge of how the attacks are affecting retailers.

"The September numbers are so heavily distorted by the attack and its aftermath, it's going to be another month at least before we can see the real situation," said Jay Mueller, an economist at Strong Capital Management Inc.

Airline stocks declined after NBC News said one of its employees had anthrax. The American Stock Exchange Airline Index lost 6 percent, with all 10 members declining.

The index is 38 percent below it pre-attack level. Northwest Airlines Corp fell 81 cents to US$12.99; AMR Corp, parent of American Airlines, lost US$1.69 to US$20.51; UAL Corp owner of United Airlines, shed US$1.47 to US$18.63; and Delta Air Lines Inc fell US$2.03 to US$25.80.