Banking worries drop Dow

NEW YORK — Wall Street resumed its slide Monday as investors absorbed a gloomy outlook for the banking sector, as well as bleak news about housing.

The major stock market indexes each fell more than 1.5 percent, with the Dow Jones industrial average giving up 218 points.

Concerns about the banking sector dominated the session. Goldman Sachs Group Inc.'s downgrade of large banks, and its estimate that Citigroup Inc. would have to write down $15 billion over the next two quarters due to its exposure to risky debt, unnerved Wall Street.

Other sectors suffered big hits during the session, including homebuilders and airlines.

The latest concerns about the housing sector arose after a downcast survey from the National Association of Homebuilders and a lowered forecast from home-improvement retailer Lowe's Cos. The worry on Wall Street is that the housing market is getting so weak it will crimp consumer spending, which accounts for about 70 percent of economic activity and has helped keep the economy afloat. Ahead of the holiday shopping season, any signs that Americans are pulling back could prevent a December rally.

The NAHB's November housing forecast remained unchanged at its lowest-ever level, even after the October figure was revised to 19 from 18. Economists polled by Thomson/IFR had expected the index would come in at 18. The survey began in 1985.

"I think that a lot of folks are digesting the news from last week and they're worried about the economy and the ability to grow earnings at the larger companies in America," said Rob Lutts, chief investment officer at Cabot Money Management Inc. in Salem, Mass.

The Dow industrials fell 218.35, or 1.66 percent, to 12,958.44.

Broader stock indicators also declined. The S&P 500 index fell 25.47, or 1.75 percent, to 1,433.27, and the Nasdaq composite index fell 43.86, or 1.66 percent, to 2,593.38.

With Monday's decline, stocks have seen losses in seven of the past eight sessions. Last week, stocks ended higher after a string of volatile sessions. Many traders are wondering whether the major indexes will test the lows for the year that came in August.