US stocks drop on writedown concern; Lehman, Goldman retreat

US stocks dropped, extending the first weekly loss in a month, as investors speculated credit writedowns at financial firms will increase and a rise in oil damped earnings prospects for automakers and airlines.

Goldman Sachs Group Inc, Morgan Stanley and Lehman Brothers Holdings Inc led financial shares in the Standard & Poor's 500 Index to a one-month low after Citigroup Inc cut their profit estimates.

General Motors Corp fell as much as 4.1 per cent and US Airways Group Inc plunged 11 per cent as oil advanced the most in two months. Supervalu Inc and Safeway Inc. slipped 3 per cent after UBS AG said inflation will cut into supermarkets' profits.

The S&P 500 slumped 3.62, or 0.3 per cent, to 1,270.92 at 12:32 pm in New York. The Dow Jones Industrial Average lost 47.14, or 0.4 per cent, to 11,370.29, and the Nasdaq Composite Index decreased 20.91, or 0.9 per cent, to 2,368.17. Eleven stocks fell for every six that rose on the New York Stock Exchange.

“In the financial situation overall, there are still more hurdles,” Kurt Brunner, a Philadelphia-based money manager who helps oversee about $1.5 billion at Swarthmore Group Inc, told Bloomberg Radio. “It's still muddy out there, and it goes across the financial spectrum.”