U.S. Stocks Drop After Wachovia Report Loss

U.S. stocks fell on Monday for a second day after Wachovia Corp. reported an unexpected first quarter loss, adding to investors tension about earning reports after bellwether General Electric Corp. disappointed last week with its earnings loss.

Wachovia, the fourth-largest U.S. bank, dropped the most in 17 years after cutting its dividend and announcing plans to raise $7 billion to mend capital lost from mortgage losses.

Citigroup Inc. fell after Merrill Lynch said a slowdown in consumer finance and capital markets will hurt profits. Exxon Mobil Corp. and International Business Machines Corp. gained, after Goldman raised its profit forecast for IBM and higher oil lifted energy shares.

The Standard & Poor's 500 Index slipped 4.20 points, or 0.3 percent, to 1,328.63 at 12:11 p.m. in New York. The Dow lost 15.55 or 0.1 percent to 12,309.87. The Nasdaq Composite Index fell 9.78, or 0.4 percent, to 2,280.46.

Wachovia shares dropped $2.787, or 9.9 percent, to $25.06 after reporting a loss of 20 cents a share, compared with profit of $1.20 a share a year earlier, as a result of subprime-infected mortgage holdings.

Chief Executive Officer Kennedy Thompson said he was deeply disappointed'' after Wachovia posted its first quarterly loss since 2001 and lowered its dividend to conserve $2 billion of capital.

The Commerce Department reported a slight increase in March retail sales, topping the flat expectations of analysts.

This report highlights that the consumer is facing a number of strains from higher energy prices to a weakening labor market, said Lehman Brothers economist Drew Matus in a research note.

IBM, the world's largest computer-services company, added 99 cents to $116.99 after Goldman increased its share- price forecast and earnings estimates.

Exxon, the largest U.S. energy company, climbed 76 cents to $89.38. Crude oil for May traded $110.10 a barrel in New York.

Circuit City Stores Inc. gained $1.13 cents, or 28.97 percent, to $5.02. Blockbuster Inc., the world's largest movie-rental chain, made an unsolicited bid, worth as much as $1.35 billion, or $6 per share, for the second-largest U.S. electronics retailer.