Wall Street Stressed Out

Bloomberg - The U.S. bear market deepened, thrusting the Standard & Poor's 500 Index to its lowest level since 2005, as investors lost confidence in a government attempt to rescue Fannie Mae and Freddie Mac and analysts predicted bank losses will worsen.

Shares also tumbled across Europe and Asia and the dollar sank to a record low against the euro. Citigroup Inc., the biggest U.S. bank, plunged to the lowest level since former Chairman and Chief Executive Officer Sanford Weill created the company through a merger in October 1998. Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, extended losses to more than 80 percent in 2008.

``This is a systemic financial crisis, there is no end to it,'' Nouriel Roubini, professor of economics and international business at New York University, told Bloomberg Television. ``It's a vicious circle between a contracting economy and greater credit and financial losses feeding on the economy.''

The S&P 500 lost 22.51 points, or 1.8 percent, to 1,205.79 at 10:01 a.m. in New York. The Dow Jones Industrial Average retreated 157.64, or 1.4 percent, to 10,897.64. The Nasdaq Composite Index decreased 26.55, or 1.2 percent, to 2,186.32. Eight stocks fell for each that rose on the New York Stock Exchange.

Stocks also retreated after retail sales in the U.S. rose less than forecast in June, a sign the boost from the government's tax rebates meant to stimulate the economy may already be fading. Prices paid to U.S. producers climbed 1.8 percent in June, the biggest gain since November, as surging fuel costs underscored risks of inflation.

The dollar declined to a record low against the euro. U.S. Treasuries rose for a second day on rising demand for the safest investments.