U.S. Stocks Drop on Oil's Surge, Concern Tech Demand Is Slowing (Elizabeth Stanton)

Created by : Francis Goodwin View profile

(Bloomberg) -- U.S. stocks slid to a three-month low, led by consumer and technology companies, as threats of increased violence in the Middle East pushed oil prices higher and analysts said demand for electronics may weaken.

Benchmark indexes extended declines after Standard & Poor's said it may cut credit ratings on General Motors Corp. and Ford Motor Co. because of higher fuel costs, sending GM to its lowest level since 1982. SanDisk Corp. posted its worst drop in eight months on Citigroup Inc.'s prediction that earnings will be less than estimated because of diminished overseas demand. Citigroup led financial shares to a five-year low as UBS AG said the biggest U.S. bank may post a second-quarter loss.

Shares in Europe and Asia also tumbled and the MSCI Emerging Markets Index fell for a third day as Iran's threat to retaliate against a potential attack by Israel weighed on shares. The slide pushed the S&P 500 Index to its third-straight weekly retreat.

``Investors are continuing to lose confidence in the economy,'' said James W. Gaul, a portfolio manager at Boston Advisors LLC in Boston, which manages $2 billion. ``The idea that we're going to end the year up is probably going out the window now.''

The S&P 500 lost 24.90 points, or 1.9 percent, to 1,317.93. The Dow Jones Industrial Average dropped 220.4, or 1.8 percent, to 11,842.69. The Nasdaq Composite Index slid 55.97, or 2.3 percent, to 2,406.09. Six stocks fell for each that rose on the New York Stock Exchange.