Dow Falls On Citigroup’s Profit Outlook

After four trading days of rally, the Dow Jones Industrial Average (^DJI: 12449.08 -83.52 -0.67%) fell for the first time, weighed down by the decline in financial stocks, which are retreating by the biggest amount in nearly two weeks. Citigroup (C: 22.11 -1.31 -5.59%), the largest US bank, slumped the most in the Dow after Oppenheimer & Co.’s Meredith Whitney said its quarterly loss will be four times bigger than previously forecast. She cut her full-year estimate to a loss of 15 cents a share from profit of 75 cents to reflect potential first-quarter writedowns on leveraged loans and collateralized debt obligations of $13.1 billion. She said in a report dated yesterday that in the first quarter, the bank may lose $1.15 a share, compared with an initial loss estimate of 28 cents.
Dow has fallen more than 110 points so far in Wednesday’s trading. Stocks are also suffering from the unexpected 1.7% drop in US durable goods orders for February, which measure demand for products made to last at least three years. This followed a 4.7% decrease in January. It was also reported today that sales of new homes dropped 1.8% last month to a 13-year low.
Motorola (MOT: 10.06 +0.30 +3.07%), the biggest US maker of mobile phones, climbed today after announcing plans to split into two publicly traded companies. One company will focus on handsets and the other will sell broadband networking devices. Before today, Motorola stock had fallen 56% in the past two years as customers hankered after phones from Apple (AAPL: 144.92 +3.94 +2.79%) and Nokia (NOK: 31.44 -0.15 -0.47%). Although Motorola was well-known for coming up with its Razr, which started the category of slim phones when it was introduced in 2004, it lost market share in phones last year after failing to come up with a hit successor following Razr.
Clear Channel Communications (CCU: 27.18 -5.38 -16.52%) posted its steepest drop since July 2002 on concern banks will pull loans for the broadcaster’s $19.5 billion takeover. Lehman Brothers (LEH: 42.86 -2.35 -5.20%) slashed its price estimate on the stock by 36% to $25.