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Battered sectors take cue from rising interest rates

June 08, 2007|Tom Petruno

Wall Street's slump Thursday was led by stock sectors that might have the most to lose from rising interest rates -- including home builders, investment banks and utilities.

Among the day's highlights:

* Builders' shares tumbled on worries about rising mortgage rates, which are being pulled up by the surge in bond yields. The average 30-year mortgage rate reached 6.53% this week, up from 6.42% last week and the highest since August, according to mortgage finance giant Freddie Mac.

KB Home slumped $1.65 to $43.85, Centex fell $1.81 to $44.60, and Lennar lost $1.86 to $42.42.

* Goldman Sachs led investment-banking stocks down on fears that rising interest rates could slow takeover financing activity and crimp the banks' fee income. Goldman slid $7.30 to $220.05. Bear Stearns fell $4.31 to $144.40.

* The Dow utility stock index plunged 3.3%, bringing its decline to 9% since it peaked May 21. Higher bond yields present more competition for utility dividend yields.

* In the broader market, the Standard & Poor's 500 index dropped 26.66 points, or 1.8%, to 1,490.72. The Nasdaq composite gave up 45.80 points, or 1.8%, to 2,541.38. The Russell 2,000 small-stock index tumbled 1.9%.

* In foreign trading, the German market slumped 1.4%, Mexican stocks fell 1.6% and the Russian market dropped 1.1%.

* As if Wall Street didn't have enough problems, crude oil prices rose to their highest level of the year, gaining 97 cents to $66.93 a barrel in New York on continuing concerns about oil and gasoline supplies.

* On the plus side, Apple rose 43 cents to a record $124.07 as the company prepares to roll out its iPhone.

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