* Financial, home builder shares lead decline
* HSBC's profit slide spotlights U.S. housing impact
* Inflation gauge jumps day before Fed to meet
* Sharp slide in oil helps limit equity losses
(Updates to midday, changes byline)
By Steven C. Johnson
NEW YORK, Aug 4 (Reuters) - U.S. stocks fell on Monday as
investors feared the housing slump will spark new losses in the
financial sector, compounding the troubles facing the economy.
Data pointing to mounting U.S. price pressures added to the
negative tone earlier, though a sudden slide in the price of
oil helped the three major indexes pare losses.
Oil had climbed last week on concern about Iran's nuclear
program but dropped suddenly by more than $5 on Monday, partly
on concern that a global slowdown would blunt demand.
"The pullback in oil helped, but when you strip away the
backdrop, we're still faced with an anemic economy and tepid
profits, and I'm not sure there's a real compelling story to
jump on the equity bandwagon," said Jack Ablin, chief
investment officer at Harris Private Bank in Chicago.
The Dow Jones industrial average <> was down 16.04
points, or 0.14 percent, at 11,310.28. The Standard & Poor's
500 Index <.SPX> was down 7.12 points, or 0.56 percent, at
1,253.19. The Nasdaq Composite Index <> was down 18.92
points, or 0.82 percent, at 2,292.04.
Shares of energy companies were laggards on the Dow and
S&P, with Exxon Mobil <XOM.N> shares down 2.8 percent and
Chevron <CVX.N> down 1.7 percent.
Bank stocks pared losses but were still down on the day,
with Citigroup <C.N> off 0.8 percent and JPMorgan Chase <JPM.N>
down 1 percent.
News that WCI Communities <WCI.N> , a major U.S. home
builder, had filed for bankruptcy unnerved investors.
"There's a feeling we're still in a bear market. It's kind
of a 'take cover' today,'" said Tim Ghriskey, chief investment
officer of Solaris Asset Management in Bedford Hills, New
York.
Igniting concerns about the financial sector, HSBC <HSBA.L>
<HBC.N>, Europe's biggest bank, reported a 28 percent drop in
first-half profit, which included a $14 billion hit from bad
debts on U.S. home loans and asset write-downs.
Wachovia Corp <WB.N> shares fell 5.6 percent to $17.92 after
a Wall Street analyst suggested investors unload shares of the
fourth-largest U.S. bank. For details, see [].
Citigroup shares fell to $18.74 and JPMorgan Chase shares
were down 1.1 percent to $40.33.
Investors were also unnerved by government data showing
accelerating inflation a day before a Federal Reserve policy
meeting. Markets expect the Fed to keep rates on hold at 2
percent.
U.S. crude <CLc1> was down about $3 at $121.41 a barrel
after earlier dipping below $120. The move lower accelerated
after Democratic presidential candidate Barack Obama called for
the sale of 70 million barrels from the U.S. energy stockpile
to ease high gasoline costs.
The slumping U.S. housing sector, however, remained a top
concern. New York University economics professor Nouriel
Roubini said in Barron's newspaper that the United States is in
the early stages of a recession that will last for at least 18
months and help cause hundreds of banks to fail.
[]
Among home builders, shares of Hovnanian Enterprises
<HOV.N> slid 4.4 percent to $6.52 after WCI Communities filed
for bankruptcy protection.
On the Nasdaq 100, shares of chip maker Qualcomm <QCOM.O>
was the biggest drag on the index, dropping 3.4 percent to
$53.61 after Motorola <MOT.N> announced it at hired Qualcomm's
chief operating officer to head its money-losing mobile devices
unit. []
(Additional reporting by Ellis Mnyandu; Editing by Kenneth
Barry)
