Most U.S. Stocks Decline on Credit Crisis; Regional Banks Gain

By Lynn Thomasson

Oct. 10 (Bloomberg) -- Most U.S. stocks fell as the escalating credit crisis spurred concern more companies will fail. Benchmark indexes pared declines as regional banks rallied on speculation they'll capture more market share.

Wachovia Corp., Fifth Third Bancorp and Regions Financial Corp. climbed more than 15 percent, helping the Standard & Poor's 500 Index pare a slump of as much 7.7 percent.

The S&P 500 lost 7.43 points, or 0.8 percent, to 902.49 at 10:17 a.m. in New York, extending its weekly plunge to 18 percent. The Dow Jones Industrial Average slipped 77.02 points, or 0.9 percent, to 8,502.17, paring a 697 point drop. The Nasdaq Composite Index added 0.1 percent to 1,646.83.

The S&P 500 has fallen for eight straight days, its longest losing streak since 1996. The declines pushed both the S&P 500 and Dow average down more than 40 percent from their peaks last October and set them on course for their worst yearly returns since the Great Depression.

The rout left the S&P 500 valued at 17 times reported earnings of its companies, its cheapest level in more than a year.

Credit markets stayed frozen as the cost of borrowing in dollars in London for three months rose for a fourth consecutive day. The London interbank offered rate, or Libor, that banks charge each other for such loans climbed 7 basis points to 4.82 percent today, the British Bankers' Association said.

More than $20 trillion has been wiped off equity markets in the last 12 months as the financial crisis that started with non-performing U.S. subprime loans spread to economies globally.

To contact the reporter for this story: Lynn Thomasson in New York at lthomasson@bloomberg.net;