U.S. Stocks Declining

U.S. stocks fell for a second day on concern that a crisis at two Bear Stearns Cos. hedge funds may spark losses in mortgage securities and reduce profits at the world's biggest financial firms.

Citigroup Inc., American International Group Inc. and JPMorgan Chase & Co. declined. Nokia Oyj, the biggest mobile- phone maker, slipped after analysts cut recommendations on the shares.

Financial stocks yesterday led the Standard & Poor's 500 Index to its steepest loss in two weeks after Merrill Lynch & Co. threatened to sell mortgage securities seized as collateral for loans it made to Bear Stearns Cos. hedge funds. The funds have lost money this year due to swings in the values of securities containing subrpime mortgage loans.

``It's the uncertainty of not knowing what other hedge funds might be having problems,'' said Kent Croft, who manages $600 million at Croft-Leominster Inc. in Baltimore. ``When you have to unravel positions over a short period of time, that can affect the market. You're thinking `What else is out there?''

The S&P 500 Index retreated 2.24, or 0.2 percent, to 1510.6 at 9:42 a.m. in New York. The Dow Jones Industrial Average lost 35.6, or 0.3 percent, to 13,453.82. The Nasdaq Composite Index decreased 5 to 2594.96.

Citigroup fell 42 cents to $53.02. AIG lost 29 cents to $71.73. JPMorgan retreated 13 cents to $49.33.

Nokia Oyj's American depositary receipts retreated 56 cents to $27.73. Goldman, Sachs & Co. cut its recommendation on the shares to ``neutral'' from ``buy'' after the stock rallied 40 percent this year.

source:www.bloomberg.com