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US close: Heavy falls for US stocks

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Date: Wednesday 07 May 2008

LONDON (ShareCast) - A slide in pending home sales in March and the continued strength of oil prices had US shares on the retreat with heavy falls across the board as the price of crude climbed to $123 per barrel.

Dow Jones lost 206 points to close at 12,814. Nasdaq dropped 44 to 2,438 and the S&P 500 lost 25 at 1,392.

Housebuilders came under pressure after the index of pending home resales dipped 1% to 83 in March, after sliding a revised 2.8% in February. DR Horton and Pulte Homes plus mortgage lender Countrywide Financial all fell sharply.

The news outweighed unexpectedly good news on the productivity front. Productivity rose at a 2.2% annual rate in the first quarter of 2008 after rising 1.8% in the fourth quarter, as employers cut back on staff while still attempting to maintain the same output levels.

Mobile phone company Sprint Nextel announced plans to team up with Internet company Clearwire to run a proposed high-speed wireless network.

The joint-venture, into which Clearwire will be subsumed, has the backing of Intel and Google plus cable networks Comcast, Time Warner and Bright House Networks. Between them the companies have agreed to invest $3.2bn in the new venture through the purchase of Clearwire’s common stock at a target price of $20, though this target price is subject to adjustment depending on the trading performance of the newly issued shares once they begin trading.

The joint-venture announcement sparked selling in rivals AT&T and Verizon Wireless, however, with analysts saying that the Sprint-Clearwire team-up gives the joint-venture a head start on its competitors in the race to set up a nationwide WiMAX network.

Insurance broker Marsh & McLennan reported a first quarter loss of 40 cents a share. The company said it hopes to sell parts of its Kroll subsidiary after a $425m write-down at the unit plunged the company into loss.

Theme park operator and film studio Walt Disney was the Dow's best performer as fiscal second quarter earnings per share rose 35% to $0.58 compared to $0.43 in the prior-year.

Computer services provider Cognizant was a major casualty after sales and profit forecasts fell short of analysts' projections. Second-quarter earnings are expected to be around 34 or 35 cents, the company said today. Analysts had been expecting earnings per share of 36 cents. Revenue was forecast to be at least $680m, versus market expectations of around $710m.

S&P 500 - Risers
Titanium Metals Corp (TIE) $17.70 +11.74%
Directv Group (The) Inc (DTV) $27.01 +4.69%
Pitney Bowes Inc (PBI) $38.16 +4.12%
Anadarko Petroleum (APC) $76.68 +2.88%
Walt Disney-Disney C (DIS) $34.70 +2.88%
American Capital Strategies, Ltd. (ACAS) $31.29 +2.46%

S&P 500 - Fallers
Cognizant Technology Solutions Corporation (CTSH) $30.21 -10.49%
Countrywide Fnl Cp (CFC) $4.94 -7.49%
Amer Intl Group Inc (AIG) $45.08 -6.86%
D R Horton Inc (DHI) $15.73 -6.65%
Stilwell Financial Inc (JNS) $28.95 -6.52%
M B I A Inc (MBI) $10.67 -6.32%

Dow Jones I.A - Risers
Walt Disney-Disney C (DIS) $34.70 +2.88%
International Business Machines (IBM) $124.02 +0.98%
Wal Mart Stores (WMT) $56.83 +0.85%
Merck Co Inc (MRK) $39.01 +0.44%
Alcoa Inc (AA) $38.13 +0.34%
Hewlett Packard Co (HPQ) $48.65 +0.02%

Dow Jones I.A - Fallers
Amer Intl Group Inc (AIG) $45.08 -6.86%
Citigroup Inc (C) $24.48 -5.37%
American Express Inc (AXP) $48.65 -4.53%
General Motors (GM) $21.37 -4.34%
Jp Morgan Chase Co (JPM) $46.57 -3.38%
Bk Of America Cp (BAC) $38.00 -3.04%