The market was in for a beating this morning as investors dumped stocks across the board. Some of the hardest hit stocks were in the financial sector. Wachovia (NASDAQ:WB), the 4th largest US bank, ousted CEO Kennedy Thompson after subprime losses pushed its share prices down by nearly half. This ouster further squashed its share prices to levels not seen since 1995.
UK bank Bradford & Bingley plunged over 24% as it announced it will be raising capital by selling its shares at a whopping 33% discount. It also announced that loans in arrears had increased to a total of 2.16% from 1.63% at the end of last year.
Lehman Brothers (LEH) shares also took a fall as Merrill Lynch (MER) downgraded them to ‘underperform’ from ‘neutral’. Merrill said the downgrade was due to a risk of further writedowns in the already troubled securities firm. Merrill’s shares were also punished as it fell 1.8%. Citigroup (NYSE:C), JP Morgan (NYSE:JPM), Bank of America (NYSE:BAC) and most other financials also joined in the fall.
Another sector to see a fall are airlines as high oil prices push them further into the red. The international airline industry is expected to lose $2.3 billion compared with a projected profit of $4.5 billion announced in March. Giovanni Bisignani, IATA director general, said that for every dollar that oil moves up, airline costs go up by $1.6 billion. Total fuel costs for airlines are expected to be $176 billion for the year and now make up 34% of operating costs.
Merged Dutch & French carriers KLM/AirFrance (AKH) recently announced that they will be building plants to grow and extract fuel from algae. Test flights with mixed algae fuel and standard jet fuel are expected this year and they’ve set a goal to move to fuel entirely produced by algae in the future.
Car manufacturers are also feeling the pinch of high oil and Toyota Motors (NYSE:TM) said it is considering cutting its US sales forecast as sales in trucks and other big vehicles continues to worsen. General Motors (NYSE:GM) and Ford (NYSE:F) have already been feeling this for a long time and their shares continue to mirror this decline.
And if recent earnings from tourist-related businesses made investors think that foreign tourism to the US would offset a decline in US travelers, then Marriott’s (NYSE:MAR) announcement that revenue will increase slower due to slumping demand should set them straight. Marriott’s shares declined on the warning and pulled down others in the business like Starwood (HOT) & Wyndham (NYSE:WYN).