EFinancialInvestment

U.S. stocks slid, sending benchmark indexes below their lowest closing levels since 2003, on a record slump in homebuilder confidence and growing concern banks will report more losses.

Citigroup Inc. slid 5.4 percent to below its lowest closing price since 1995 after Deutsche Bank AG analyst Mike Mayo said the bank may post a 2009 deficit as revenue falls and credit costs rise. CIT Group Inc. sank 22 percent after Barclays Plc cut its price estimate for the largest independent U.S. commercial lender because its plan to sell shares will dilute earnings. Corning Inc. tumbled 16 percent as the biggest maker of glass for flat-panel televisions said demand has waned.

The Standard & Poor’s 500 Index declined 1.9 percent to 835.03 at 1:51 p.m. in New York. The Dow Jones Industrial Average lost 114.38 points, or 1.4 percent, to 8,159.2. The Nasdaq Composite Index slipped 2.7 percent to 1,442.22. All three gauges traded below their lowest closes in more than five years. Five stocks retreated for each that rose on the New York Stock Exchange.

“There’s still a good deal of selling pressure underlying the market action,” Louise Yamada, managing director of Louise Yamada Technical Research Advisors LLC, told Bloomberg Radio. “There’s a growing possibility we break the 2002 lows.”

Benchmark indexes extended declines after the National Association of Home Builders/Wells Fargo index of builder confidence decreased to a lower-than-forecast reading of 9, the lowest level since record-keeping began in 1985. Earlier gains in the stock market were spurred by better than estimated earnings at Hewlett-Packard Co. and Home Depot Inc.

Yield Spread

The S&P 500’s dividend yield moved above the yield on 10- year Treasury notes for the first time since 1958 today, according to data compiled by Bloomberg and Peter Bernstein, the financial author and president of Peter L. Bernstein Inc. Dividends paid by S&P 500 companies were 3.55 percent of the index’s price as of 1:13 p.m., compared with the 10-year note’s yield of 3.52 percent.

The S&P 500 is down more than 42 percent in 2008, poised for its worst year since 1931, as credit losses and asset writedowns at global financial firms approach $1 trillion. Profits slumped 17 percent on average at companies in the index that have reported third-quarter results, according to Bloomberg data. Analysts expect an 8.5 percent drop in full-year earnings, based on estimates compiled by Bloomberg.

The benchmark index for U.S. equities may extend this year’s drop after a rally from last week’s five-year low lasted just one day, say analysts who study charts of trading patterns and prices to forecast changes in stocks.

Searching For Bottom

After rebounding 11 percent from its low of the day on Nov. 13, the S&P 500 slipped 6.6 percent during the next two days and will probably keep falling past 818.69, its lowest level since 2003, according to three top-ranked technical analysts. The S&P 500 declined below its Oct. 10 low of 839.8 before rallying last week, making it a “retest” to chart readers.

Citigroup dropped 48 cents to $8.41. The bank that yesterday announced plans to cut 52,000 jobs may post a loss of 30 cents per share next year, compared with a previous estimate of a $1.50 profit, Mayo wrote in a note.

CIT Group dropped the most in the S&P 500, losing 77 cents, or 22 percent, to $2.72. The lender’s share-price forecast was reduced to $11 from $13 by Barclays.

Corning Inc. declined 15 percent to $7.62. The biggest maker of glass for flat-panel televisions said fourth-quarter sales will miss its forecast as demand for TVs and computer monitors wanes.

Hewlett-Packard, Home Depot

Hewlett-Packard added $3.29, or 11 percent, to $32.63. The computer maker reported fourth-quarter earnings of $1.03 a share, excluding reorganizing expenses and other costs, exceeding the $1 average analyst estimate. The results signal Hewlett-Packard is withstanding an economic crisis that has sapped sales at other technology companies, including Cisco Systems Inc. and Intel Corp.

Home Depot, the world’s largest home-improvement retailer, added 60 cents, or 3 percent, to $20.60 after profit declined less than analysts estimated and the company repeated its earnings forecast for the year. As U.S. consumers cut back on renovations and cabinet purchases, Home Depot has slashed corporate expenses and closed stores to help remain profitable.

Medtronic Inc. dropped $4.28, or 12 percent, to $32.14. The world’s second-biggest maker of medical devices said fiscal second-quarter profit fell 14 percent, missing analysts’ estimates, on legal costs.

Yahoo Speculation

Yahoo! Inc. jumped 10 percent to $11.72 after Chief Executive Officer Jerry Yang agreed to step down, opening the door for a fresh bid from Microsoft Corp. The company’s market value has dropped by more than $20 billion since Yang took over as CEO in June 2007 as discussions with Microsoft ended in failure, an ad partnership with Google Inc. was derailed and talks with Time Warner Inc.’s AOL stalled. Yahoo “might be worth $21” a share to an acquirer, Goldman Sachs Group Inc. said.

The cost of borrowing in dollars for three months in London fell for the first time in four days ahead of Congressional testimony from Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson. The London interbank offered rate, or Libor, that banks say they charge each other for three- month loans declined two basis points to 2.22 percent today, according to the British Bankers’ Association.

Bernanke said lending in the U.S. is “still far from normal,” even after emergency federal programs helped reduce interest rates for some borrowers.

“There are some signs that credit markets, while still quite strained, are improving,” Bernanke told the House Financial Services Committee. “However, overall, credit conditions are still far from normal.”