U.S. Stocks Drop To 18-Month Low On Deepening Concerns Over Loan Defaults (Michael Patterson)

  March 6 (Bloomberg) -- U.S. stocks fell to an 18-month low, led by banks, after home foreclosures climbed to a record and loan defaults by Thornburg Mortgage Inc. and a Carlyle Group bond fund spurred concern that credit losses are deepening.

  Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. led financial shares to the lowest level since May 2003. Retailers J.C. Penney Co. and Gap Inc. fell on sales that trailed estimates. The Standard & Poor's 500 Index lost 10 points in the final half hour of trading as investors speculated tomorrow's U.S. employment report will show the economy has tipped closer to recession.

  The S&P 500 tumbled 29.36 points, or 2.2 percent, to 1,304.34, the lowest closing level since September 2006. The Dow Jones Industrial Average lost 214.6, or 1.8 percent, to 12,040.39. The Nasdaq Composite Index decreased 52.31, or 2.3 percent, to 2,220.5. More than 11 stocks fell for every one that rose on the New York Stock Exchange.

  ``It's a tough environment,'' Paul Rasplicka, who manages $4 billion at AIM Investments, said in a Bloomberg Television interview in New York. ``Lending terms are tighter. The willingness to extend credit is less. It's making it very tough for business.''

  Financial stocks fell for a sixth day, the longest losing streak since November, after an industry report showed home foreclosures surged at the end of 2007 and late payments rose to the highest in 23 years. The S&P 500 fell below its lowest close of the year on Jan. 22, the day Federal Reserve policy makers slashed interest rates by the most in 23 years in response to tumbling global stocks and increased concern that the economy was contracting.

more

READ MORE: Bloomberg