Nov. 26 (Bloomberg) -- U.S. stocks retreated, led by banks and brokerages, after Goldman Sachs Group Inc. said HSBC Holdings Plc faces $12 billion in additional writedowns for subprime defaults.
Citigroup Inc., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. declined on concern losses are deepening in securities tied to home loans. Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, tumbled after UBS AG said higher credit costs will cause earnings growth to slow.
The Standard & Poor's 500 Index dropped 5.27, or 0.4 percent, to 1,435.43 at 12:39 p.m. in New York. The Nasdaq Composite Index lost 6.01, or 0.2 percent, to 2,590.59. The Dow Jones Industrial Average slipped 0.73 to 12,980.115. About seven stocks fell for every five that rose on the New York Stock Exchange.
``Are brokerages and banks strong enough to continue to support growth in our country? This is the thing that's weighing on people's minds,'' said Robert Lutts, who oversees $500 million as president and chief investment officer at Cabot Money Management Inc. in Salem, Massachusetts. ``There's a lot of housecleaning to do and wringing out of problems.''
HSBC, Europe's largest bank, will bail out two structured investment vehicles by taking on $45 billion of assets to avoid a fire sale of bond holdings. Banks are trying to prevent SIVs, companies that borrow short-term to invest in higher-yielding securities, from collapsing and forcing fund managers to sell their $320 billion of assets.
Financials Slump
Bank of America Corp., Citigroup and JPMorgan Chase & Co. are trying to persuade competitors to help finance an $80 billion ``SuperSIV'' fund to bail out the companies.
Citigroup, the biggest U.S. bank by assets, slipped $1.13 to $30.57 and posted the biggest decline in the 30-member Dow average after CNBC said it may cut as many as 45,000 jobs. Citigroup said ``reports on specific numbers are not factual.''
Lehman dropped $1.39 to $59.47. Merrill decreased $1.19 to $52.35.
Fannie Mae and Freddie Mac were cut to ``neutral'' from ``buy'' by analysts at UBS AG, who lowered the price estimate on Fannie Mae to $31 from $88 and Freddie Mac to $28 from $87.
Fannie Mae dropped $2.38 to $29.82. Freddie Mac fell $1.87 to $24.61.
Financial shares in the S&P 500 dropped 1.9 percent as a group and contributed the most to the overall index's decline.
``In general it's a pretty pessimistic market,'' said Bartley Barnett, head of listed trading at Memphis-based Morgan Keegan Inc., which has $120 billion in client assets. ``It seems like there are two sides to every story and everyone's leaning to the negative side right now.''
Apple, Amazon.com
Apple Inc., maker of the iPod, iPhone and Macintosh computers, added $4.06 to $175.60. Goldman Sachs recommended investors buy shares of the company after a ``strong start'' to the so-called Black Friday weekend. ``Apple will have multiple winners once again this holiday season, with Macs a particular standout,'' wrote analysts David Bailey and Laura Conigliaro.
Amazon.com, the world's largest Internet retailer, rose $1.48 to $82.91. EBay, the biggest Internet auctioneer, gained 17 cents to $32.11.
Online retail spending today may surpass $700 million, a single-day record, as customers head online to find bargains.
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