* Financials fall on JPMorgan downgrade, Madoff fallout
* Tech falls on consumer spending worry
* Fed in focus ahead of rate-cut decision
* Dow off 0.8 pct, S&P off 1.3 pct, Nasdaq off 2.1 pct
* For up-to-the-minute market news, please click on
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(Updates to close)
By Chuck Mikolajczak
NEW YORK, Dec 15 (Reuters) - U.S. stocks stumbled on
Monday, roiled by worries about how big a bite the global
financial crisis has taken from banks' profits and fallout
from a massive investment fraud scheme.
JPMorgan Chase & Co <JPM.N> was the biggest drag on the
Dow after Merrill Lynch cut the stock to an "underperform"
rating and forecast a loss for the bank's fourth quarter.
For details, see [].
Another blow to sentiment was concern about the financial
sector's exposure to potential losses related to investment
manager Bernard Madoff, who is accused by U.S. authorities of
masterminding a $50 billion fraud.
"There will be some investors as a result of this who say,
'I'm going to put all my money in cash,'" said Tim Ghriskey,
chief investment officer of Solaris Asset Management in
Bedford Hills, New York.
"You should know where your money is custodied."
The Dow Jones industrial average <> shed 65.15 points,
or 0.75 percent, to end at 8,564.53. The Standard & Poor's 500
Index <.SPX> fell 11.16 points, or 1.27 percent, to 868.57.
The Nasdaq Composite Index <> dropped 32.38 points, or
2.10 percent, to 1,508.34.
The downgrade of JPMorgan comes before earnings this week
from two other big financial names, Goldman Sachs <GS.N>
Tuesday and Morgan Stanley <MS.N> on Wednesday. Analysts
expect Goldman Sachs to report its first quarterly loss since
going public in 1999. The S&P financial index <.GSPF> fell 4
percent, with JPMorgan's stock down 7.5 percent at $28.63.
Goldman Sachs Group Inc <GS.N> shed 1.9 percent to $66.46
while Morgan Stanley <MS.N> slid 1.5 percent to $13.64.
Technology shares also pulled the market lower after
Goldman Sachs cut its rating on Apple <AAPL.O> to "neutral"
and removed the iPod maker from its conviction buy list,
citing falling consumer demand for its products.
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Apple's stock slid 3.6 percent to $94.75 on Nasdaq.
Economic data gave investors more reasons for caution. A
gauge of manufacturing in New York State hit a record low in
December, while homebuilder sentiment remained at record lows
for the month. []
Investors looked ahead to an interest-rate decision from
the Federal Reserve on Tuesday. The U.S. central bank is
expected to cut its benchmark fed funds rate to 0.5 percent
from 1 percent in hopes of boosting the weak U.S. economy.
The Dow Jones U.S. Home Construction Index <.DJUSHB> fell
5.5 percent a day before the U.S. Commerce Department is
expected to report another monthly drop in housing starts.
An index of energy stocks <GSPE> slipped 0.3 percent after
crude oil <CLc2> fell below $45 a barrel on concerns about
global energy demand as major world economies struggle with
recession. When OPEC ministers meet on Wednesday, they may
make their deepest oil supply cut ever. []
Bucking the session's downtrend were shares of General
Motors <GM.N> and Ford <F.N>, which rose on hopes that a
financial lifeline could still materialize. The timing and
size of any U.S. government aid package, however, were still
in question.
GM's stock rose 3.6 percent to $4.08 and Ford added 4.6
percent to $3.18.
Volume was modest on the New York Stock Exchange, where
about 1.21 billion shares changed hands, below last year's
estimated daily average of 1.90 billion. On the Nasdaq, about
1.68 billion shares traded, below last year's daily average of
2.17 billion.
Decliners outnumbered advancers on both the NYSE and the
Nasdaq by a ratio of about 3 to 1.
(Editing by Jan Paschal)
