U.S. Stocks Fall, Led by Banks; Citigroup Retreats on Charges

April 11 (Bloomberg) -- U.S. stocks fell, snapping an eight- day advance in the Dow Jones Industrial Average, after Citigroup Inc. said it will take a $1.38 billion pretax charge.
The biggest U.S. bank will take the charge in the first quarter, along with additional charges of about $200 million in subsequent quarters this year, to cover the costs of cutting 5 percent of its workforce. Financial shares were the biggest drag among 10 industries on the Standard & Poor's 500 Index, which declined for the first time in seven days.
Stocks also dropped after the International Monetary Fund cut its forecast for U.S. economic growth this year by almost a full percentage point because of a weaker housing market than foreseen seven months ago.
The Dow average lost 24.30, or 0.2 percent, to 12,549.55 as of 10:12 a.m. in New York. The S&P 500 slipped 2.46, or 0.2 percent, to 1445.93. The Nasdaq Composite Index dropped 4.14, or 0.2 percent, to 2473.47.
Shares of Alcoa Inc. climbed after the first member of the Dow average to report quarterly earnings posted results that beat analysts' estimates.
Earnings at S&P 500 companies likely grew 3.3 percent in the January through March period, according to analyst estimates compiled by Bloomberg. At the start of the quarter, analysts expected profit to increase by at least 7 percent.
``Alcoa is a bright spot, but the worry about inflation will be an overriding concern today as we look at the minutes,'' said Kevin Caron, market strategist at Ryan Beck & Co., which has $20 billion assets under management in Florham Park, New Jersey.
Fed Minutes
Federal Reserve policy makers are scheduled to release at 2 p.m. New York time the minutes from their last policy meeting. On March 21, stocks posted their biggest rally in eight months after the central bank indicated it's no longer biased toward higher interest rates. Policy makers dropped a reference to ``additional firming'' in their statement, though they said inflation remains the ``predominant policy concern.''
``The bottom line is that the Fed is going to watch inflation,'' said Jim Bianco, head of research at Bianco Research LLC in Chicago. ``As long as the inflation rate moderates, they're going to be on hold.''
Most Americans expect a recession within a year and disapprove of President George W. Bush's handling of the economy even though unemployment is at a five-year low, a new Bloomberg/Los Angeles Times poll found.
Six in 10 who were surveyed predicted a recession, similar to the 64 percent who anticipated the economy would contract in a December 2000 poll by the Los Angeles Times three months before the last decline.
Reduced Forecast
The world's largest economy will expand 2.2 percent in 2007, compared with a September estimate of 2.9 percent, the IMF said in its twice-annual World Economic Outlook released today. The U.S. economy grew 3.3 percent in 2006.
More than 11 stocks declined for every six that advanced on the New York Stock Exchange. Some 196 million shares changed hands on the Big Board, 4.2 percent more than the same time a week ago.
Citigroup retreated 44 cents to $51.96, contributing the most to the S&P 500's loss. The bank will cut about 17,000 jobs by shutting offices and shifting some of its 337,000 full- and part-time workers to lower-cost locations. The company, whose expenses increased twice as fast as revenue last year, seeks to lower annual costs by $4.6 billion in the next three years.
Financial shares slid 0.3 percent as a group.
Alcoa
Alcoa rose 38 cents, or 1.1 percent, to $35.28 for the best performance in the Dow average. The company yesterday said profit was 79 cents a share, excluding restructuring costs and a loss of 2 cents from discontinued businesses. Analysts surveyed by Bloomberg had an average estimate of 78 cents.
Alcoa ``has strategic and financial appeal as an acquisition candidate,'' JPMorgan analysts including Michael F. Gambardella wrote in a note to clients. The company has set the stage for strong second-quarter results, said the analysts as they raised their profit estimate for next year to $2.40 a share from $2.15. Banc of America Securities LLC raised the price it expects Alcoa shares to reach to $36 from $34.
Gold producers rallied, sending the Amex Gold Bugs Index to a 1 percent advance. Gold Fields Ltd., a South African company and the world's fourth-largest gold producer, may receive a bid from investors led by U.S. financier Edward Pastorini to tap the rising price of bullion.
Gold Fields American depositary receipts, each representing one share, gained $1.16, or 6 percent, to $20.44. ADRs of Anglo American Plc, two of which represent one share of the world's second-largest mining company, added 8 cents to $27.48. Harmony Gold Mining Co. ADRs, each representing one share, increased 15 cents to $15.93.
Takeovers?
Manor Care Inc. jumped $4.37 to $60.12. Its 7.8 percent rally was the steepest in the S&P 500. The operator of nursing homes and hospice services said it hired JPMorgan to take advantage ``of currently attractive conditions in the financial markets.'' JPMorgan will advise Manor Care on its business and financial strategy.
Nasdaq Stock Market Inc. added 12 cents to $29.75. The world's largest all-electronic exchange may acquire the Philadelphia Stock Exchange to expand in options trading after losing the race to create the first trans-Atlantic equity market, an official at the Philadelphia exchange said.
The closely held Philadelphia exchange also has approached other markets and is considering an initial public offering, said the official, who declined to be identified before a decision is made.
Chico's FAS Inc. climbed $1.17 to $26.32. The clothing retailer said March sales rose 22 percent from a year ago. Same- store sales gained 5.2 percent.
American Medical Systems Holdings Inc. sank $2.73, or 13 percent, to $18.70. The maker of devices used in urological treatments cut its 2007 earnings forecasts amid inventory shortfalls for several products.
BorgWarner Inc. slid $1.97 to $74.92. Deutsche Bank AG cut its rating on shares of the world's biggest maker of automatic- transmission parts to ``hold'' from ``buy,'' based on the stock's price relative to earnings.