Wall Street extended its slide in early trading Friday after Wachovia Corp. warned it will take quarterly loan losses, raising investor concern the credit slump shows no sign of abating.
The nation's fourth-largest bank said in a filing with the Securities and Exchange Commission that credit market volatility could cause a $1.1 billion writedown for October alone. The problem stems from its asset-backed securities, such as collateralized debt obligations, that have lost value on sinking investor demand.
Investors also were rattled by speculation that Barclays PLC was about to announce a $10 billion writedown. Though the British bank denied the rumors, it demonstrated that Wall Street continues to worry that the summer's credit turmoil shows no signs of abating, and has a broader impact globally.
Further worries about the continuing credit market slump kept investors on edge a day after Federal Reserve Chairman Ben Bernanke said he expect the economy to "slow noticeably" this quarter. His comments added to the week's declines -- contributing to a slide this week on concerns about continuing credit woes, a weakening dollar and rising oil prices.
He also said the greenback's problems "may have some effect on import prices" -- which was confirmed Friday in new government data. The Commerce Department reported U.S. import prices soared last month at their fastest pace since early last year while export prices jumped at more than a decade high.
The preliminary Reuters/University of Michigan monthly index of consumer sentiment will be released Friday at 10 a.m. EST. Economists expect consumer sentiment will inch downward amid persistent worries about the housing recession and high energy prices.
The Dow Jones industrials fell 141.04, or 1.06 percent, to 13,125.25 in the first hour of trading.
The Standard & Poor's 500 index was off 19.98, or 1.35 percent, at 1,454.79, while the Nasdaq composite index tumbled 55.73, or 2.07 percent, to 2,640.27.Copyright © 2015, Los Angeles Times