NEW YORK (AP) - Stocks retreated Wednesday after Bear Stearns Cos. told investors there was little value left in two failed hedge funds, renewing concerns that soured subprime loans will wreak financial havoc on Wall Street.
The downturn in stocks nonetheless was expected after the rally that began last week and that Tuesday nudged the Dow Jones industrials past the 14,000 mark for the first time. With no major catalyst behind the advance, the record run has perhaps been puzzling to market watchers trying to determine if it has room to build or has run its course.
The latest concerns came as Bear Stearns said two hedge funds it manages were left essentially worthless by bad bets on subprime loans, which are made to those with poor credit. A weaker housing market has made it more difficult for borrowers who get behind on payments to refinance and pay off debts.
JPMorgan Chase & Co. posted better-than-expected earnings before the opening bell, but the bank said it increased reserves set aside to cover mortgage losses. Also adding to investor concern, Intel Corp. reported lackluster profit margins for the second quarter, and Yahoo Inc. lowered its forecast.
In the first hour of trading, the Dow Jones industrial average fell 39.75, or 0.28 percent, to 13,931.80. The Standard & Poor's 500 index fell 4.77, or 0.31 percent, to 1,544.60, while the Nasdaq composite indexdropped 17.15, or 0.63 percent, to 2,695.14.
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