Taxpayers may pay legal bills for mortgage execs

When the government took over mortgage giants Fannie Mae and Freddie Mac, taxpayers inherited more than just bad debts. They're also potentially on the hook for tens of millions of dollars in legal fees for the executives at the center of the housing market's collapse.

With the Justice Department investigating companies involved in the mortgage and financial meltdown, executives around the country are hiring defense lawyers. Like many large companies, Fannie and Freddie had contracts promising to cover legal bills for their executives.

When the Treasury Department delivered a $200 billion bailout to Fannie and Freddie, that obligation passed to the government, which may find itself paying for the lawyers defending the executives against the government's own prosecutors.

"Who'd have thought we might be on the hook for paying the defense costs when we're also paying the prosecution costs?" said Doug Heller, executive director of Consumer Watchdog, a Santa Monica, Calif.-based group that has been critical of the financial bailout packages. "To defend the economy from the havoc that's been created, we're going to defend the havoc creators?"

The Bush administration is working to avoid it. The Federal Housing Finance Agency, which controls Fannie and Freddie, said in regulatory filings it soon will try to prohibit the two companies from paying legal fees to their executives. But such a prohibition almost certainly would lead to a costly court fight over who's responsible for the bills when the Justice Department comes knocking.

Fannie's and Freddie's contracts also cover legal fees from shareholder lawsuits. Taxpayers could be forced to pay those legal bills, too. If the shareholders win -- if they can prove the companies were mismanaged -- the government could be liable for millions of dollars to make up for the executives' failures.

It wouldn't be the first time federal money intended to prop up the financial industry was used for unintended purposes. Days after it received an $85 billion federal bailout loan, the huge insurer American International Group Inc. spent $440,000 on an executive retreat with spa treatments, banquets and golf outings.

Both Fannie Mae and Freddie Mac have been subpoenaed as part of the wide-ranging Justice Department investigation into the companies' accounting, disclosure and governance practices. The two companies are key to the U.S. mortgage industry. After banks make loans to home buyers, Fannie and Freddie buy the mortgages from the banks so bankers can have cash on hand to make more loans and keep the economy humming. Fannie and Freddie then bundle those loans and sell them as mortgage-backed securities. The proceeds of those sales help buy more mortgages.

In recent years, however, the companies purchased more risky, subprime mortgages. When the housing bubble burst and the subprime industry imploded, investors feared the risk of buying Fannie and Freddie's mortgage-backed securities, making it harder for the companies to raise money.

Combined, Fannie and Freddie own or guarantee nearly half of all U.S. mortgages. The Treasury Department stepped in to keep the companies from collapsing and taking the mortgage industry with them.

Neither Fannie nor Freddie has said whether they already have advanced any legal fees to former executives. The companies are required to make general disclosures about such payments but only on quarterly corporate filings.

When the government took over, Fannie Mae chief executive Daniel H. Mudd, Freddie Mac chief executive Richard F. Syron and the rest of the companies' leadership was dismissed. All those executives would be entitled to have their legal fees covered.

The obligations could easily stretch into millions of dollars. Both companies have promised to pay legal fees for all current and former board members, executives and employees charged or investigated in connection with their employment.

Legal fees can add up quickly. After Freddie Mac restated its earnings in 2003, it became embroiled in several investigations and lawsuits. By the middle of 2005, the company had paid $16.8 million in legal fees for its executives and employees.

Executives who are convicted of wrongdoing are required to give the money back. Those who are acquitted, who are merely witnesses or who are investigated but never charged do not need to reimburse the company.

It's impossible to determine how much money might be at stake. In taking over the two mortgage giants, the government pledged to spend up to $200 billion to keep both companies afloat. The amount the government actually will spend depends on how well the companies perform in a changing mortgage industry.

With so much money at stake, defense attorneys are watching closely to see how broadly housing regulators restrict any future legal payments. The Fannie and Freddie contracts give the executives the right to sue to force the companies to pay their legal fees. If the executives win, the cost of those lawsuits gets passed to Fannie and Freddie, and potentially to the taxpayers.

World markets rally as US goes to the polls

European markets moved higher Tuesday on expectations Wall Street will enjoy an election day rally and ahead of Thursday's interest rate decisions from the European Central Bank and the Bank of England.

The FTSE 100 index was 78.65 points, or 1.8 percent, higher at 4,521.93, while Germany's DAX was up 95.14 points, or 1.9 percent, at 5,121.98. France's CAC-40 was 76.44 points, or 2.2 percent, higher at 3,604.41.

Most Asian stock indexes were more or less flat, apart from Japan's Nikkei, which surged 537.62 points, or 6.3 percent, at 9,114.60 as the market played catch-up after being closed Monday, when most of Asia firmed.

Wall Street is expected to enjoy an election day rally, with Dow futures up 183, or 2.0 percent, at 9,515, with investors relieved that the political uncertainty will soon be over.

"In the U.S., there's only one show in town at the moment but Europe has been reasonably strong after some half-decent numbers," said Richard Hunter, a strategist at Hargreaves Lansdown.

"Whilst the wider economic picture remains awkward, there have been a few positives the markets are clinging onto," he added.

He noted Marks & Spencer PLC, Britain's largest clothing retailer, which saw its share price rise 7 percent as third-quarter net profit came in ahead of expectations despite falling 43 percent from a year ago.

Hunter also said interbank lending rates in Europe continue to decline ahead of expected interest rate reductions Thursday from the European Central Bank and the Bank of England.

Both banks are expected to follow the U.S. Federal Reserve's lead and cut interest rates by at least half a percentage point, though there's growing talk that the Bank of England may reduce interest rates by as much as a full percentage point for the first time since four cuts of that size in 1992-3 when Britain's economy was last mired in recession.

Ahead of the rate decisions, the markets will be digesting the outcome of the U.S. presidential election. Opinion polls on the eve of the vote showed that Democratic candidate Senator Barack Obama was leading Republican rival Senator John McCain, and that the Democrats could be on course to take a firmer grip on Congress.

The Dow Jones index of leading shares, which closed Monday 5 points lower at 9,319.83, traditionally does well between the day of the U.S. election and the end of the year, though the boost ends up short-lived.

"The bad news is that the honeymoon has tended to end rather quickly," said John Higgins, an analyst at Capital Economics.

Earlier, Australia's financial issues improved after the Reserve Bank of Australia slashed rates for the third time in as many months, reducing its cash rate by a larger than anticipated 0.75 percentage points to 5.25 percent. That helped the S&P/ASX 200 index pare earlier losses to close largely flat.

Hong Kong's Hang Seng Index added 0.3 percent to 14,384.34 after fluctuating through the day, with bank shares up as lending conditions eased further.

South Korea's Kospi rose 2.2 percent, while benchmarks in Singapore and Shanghai fell.

In mainland China, the market dropped for a third day, led by mining and metals stocks. The benchmark Shanghai Composite Index slipped 0.8 percent to 1,706.7. Losers included China Shenhua Energy Ltd., the country's biggest coal producer, and Kailuan Clean Coal Ltd.

Oil prices rose, with light, sweet crude for December delivery declining $0.48 to $64.39 a barrel in European trade on the New York Mercantile Exchange.

In currencies, the dollar rose 0.5 percent to 99.62 yen, but the euro was 1.0 percent higher at $1.2764.

Stocks likely to recover no matter who's president

When it comes to the stock market -- especially this turbulent market -- does it really matter who is elected president?

Yes and no. Politicians do influence the economy -- and they'll play a big role in how the country emerges from this current crisis. But analysts say neither presidential candidate can be a cure for what's ailing Wall Street.

"The economy is a big, big machine, and the president is one government bureaucrat," said Ron Florance, Wells Fargo Private Bank Director of Asset Allocation.

Moreover, most analysts believe the battered stock market has nowhere to go but up next year, no matter who ends up in the White House -- and history will probably give the victor credit even if he actually had little to do with the rally.

"The timing couldn't be better," Florance said.

Still, the stock market is just one part of the economy, and under either Barack Obama or John McCain, the United States needs to recover from a downturn whose severity has not yet been determined. And either candidate will face a budget deficit of around $500 billion when he's sworn into office -- a shortfall expected to climb to $1 trillion next year.

Because of the deficit, the financial climate might end up affecting the new president's policies more than his policies will affect the financial climate.

"This whole financial crisis will largely serve as an agenda buster for at least the first year," said John Lynch, chief market analyst at Evergreen Investments.

That's not to say, of course, there aren't differences in the impact McCain or Obama would have on U.S. businesses, and in turn, their stocks. Robert Froehlich, an investment strategist at Deutsche Bank, said it's likely that under Obama, the alternative energy sector would do well, and possibly the paper and steel industries if he enforces trade treaties. And under McCain, Froehlich said, it's likely that big energy companies would do better because he does not support a windfall profits tax, and that financial companies could benefit because of his stance on dividend taxes, long-term capital gains taxes, and estate taxes.

"Don't expect the next president to say, 'I'm strapped with this economic crisis, I'm going to throw all my plans away,'" Froehlich said.

There are historical trends one can draw between presidents and how the stock market performs. The question is how seriously to take them.

The Dow Jones industrial average and the broader Standard & Poor's 500 index have posted larger returns during the terms of Democratic presidents. But this statistic doesn't prove that Democratic policies boost the stock market -- the major indexes have also done better under a Republican Congress than a Democratic Congress.

Another pattern to take note of is the stock market's apparent four-year cycle, described by market historian Yale Hirsch in his Presidential Election Cycle Theory. The theory says the stock market does well in a presidential election year, badly in the year after the election and then improves until the next presidential election. This pattern has held up for most of the century, although it's being tested by the two terms of President George W. Bush.

However, the monetary policy of the Federal Reserve, rather than the influence of the president, can explain this pattern better, according to a 2007 study by CFA Institute Education managing director Robert Johnson, University of Wisconsin professor Scott Beyer and Northern Illinois University professor Gerald Jensen. Their study found that the Fed has tended to lower interest rates during the latter half of presidential terms -- and lower interest rates encourage borrowing and spending.

At the end of the day, using the returns under previous presidents to predict the market's performance under another president gets to be like reading tea leaves. You'd probably do just as well basing your investments on next year's Super Bowl -- Wall Street's infamous "Super Bowl Indicator" postulates that a victory by a team that was part of the original National Football League, before it merged with the American Football League in 1970, will result in better gains for the stock market. It's actually been right most of the time.

The lesson, of course, isn't to base investment choices on a football game. (Anyone who rushed to buy stocks after the New York Giants' win in 2008 probably got pretty burned). Rather, the point is that correlation isn't the same as causation.

And investors shouldn't get too caught up in the market's short-term reaction after the election results. The Dow surged, for example, after President Hoover was elected in 1928 -- and the next year the it crashed, ushering in the Great Depression.

World markets keep sliding on global recession fears

"We're seeing a lot of panic selling," said Peter Lai, investment manager at DBS Vickers in Hong Kong. "People are just liquidating ... Nobody can predict where the bottom is."

Tokyo's Nikkei 225 index, after trading higher in the morning, closed down 6.4 percent to 7,162.90 -- the lowest since October 1982. Hong Kong's Hang Seng Index tumbled 12.7 percent to 11,015.84, its lowest close in more than four years.

European markets followed Asia lower, with benchmarks in Britain, Germany and France trading down more than 4 percent or more in early trading.

On Wall Street Friday, the Dow Jones industrial average fell 312.30, or 3.59 percent, to 8,378.95. Early Monday, stock index futures were down, signaled a lower open. Dow futures were down 268 points, or 3.2 percent, at 7,994. S&P futures were down about 4 percent.

The sharp declines Monday came amid another round of government measures to boost markets. In South Korea, the central bank slashed its key interest rate Monday by three-quarters of a percentage point -- its biggest cut ever -- to prevent Asia's fourth-largest economy from lurching into recession.

Australian and Hong Kong central bankers injected funds into their markets to ensure liquidity. Japan's prime minister urged officials to draw up measures to calm volatile stock markets and to fend off further fallout from the crisis.

In Europe, the International Monetary Fund said Sunday it had reached a tentative agreement to provide Ukraine with $16.5 billion in loans and announced that emergency assistance for Hungary had cleared a key hurdle.

Only South Korea's market managed to eke out gains, perhaps in part because of the big rate cut there. The benchmark Kospi ended 0.8 percent higher at 946.45.

In mainland China, the benchmark index slumped to its lowest level in more than two years as investors reacted to dismal earnings reports. The Shanghai Composite Index lost 6.3 percent, or 116.27 points, to 1,723.35. It is now down about 72 percent from its peak about a year ago.

"The panic spread much faster than we expected. It's as if everyone wants to be the fastest runner, with the best escape," said Feng Yuming, an analyst for Oriental Securities in Shanghai.

In the Philippines, the key index plummeted 12.3 percent to 1,713.83 points, triggering a circuit-breaker that automatically halted trading for 15 minutes. The biggest one-day drop since February 2007 was caused by "big fund players" withdrawing investments to get cash and meet redemptions at home, traders said.

Some analysts say the declines are overdone.

"Our fundamentals were ignored; we followed the U.S.," said Emmanuel Soller, broker at EquitiWorld Securities Inc. in Manila. "But I believe there was an overreaction by investors."

Tuesday's U.S. Federal Reserve meeting was more cause for caution. The central bank is expected to lower interest rates by at least a half-point to 1 percent, though the rate reduction is already priced into the market and unlikely to calm its restlessness.

In Japan, stocks fell despite a report that the government was considering massive capital injection into struggling banks in a bid to calm jittery financial markets.

"The reported plan by the government hardly cheered investors. What the market really wants is a package of stimulus measures to boost the Japanese economy," said Kazuki Miyazawa, market analyst at Daiwa Securities SMBC Co. Ltd.

Citing unidentified sources, the Yomiuri newspaper said Monday the government is considering injecting public money worth 10 trillion yen ($108 billion) into struggling banks in a bid to stabilize the financial market hit by sagging stocks and a soaring yen.

Investors in Japan dumped exporters like Toyota Motor Corp. and Sony Corp. as the yen remained strong after hitting a 13-year high of 90.89 yen on Friday as investors unwound so-called yen carry trades. The dollar stood at 92.27 yen compared with 94.24 yen late Friday in New York.

Financial ministers and central bank presidents of the Group of Seven major industrial countries issued a joint statement expressing concern about the recent volatility of the yen.

"We are concerned about the recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability," the G-7 finance officials said in a statement released in Washington, Tokyo and other G-7 capitals.

In oil, crude prices weakened after OPEC's move to cut production in an attempt to halt the declines. Light, sweet crude for December delivery was down $2.80 to $61.36 a barrel in Asian trade. The contract settled at $64.15 a barrel on the New York Mercantile Exchange on Friday.

Oil prices have plunged more than 57 percent from a record $147.27 in mid-July.

Stocks dive on belief global recession is at hand

Another bad day for the stock market. At least for the time being it is. Even though the stock market only been open for 30 minutes, stocks have plunged.

Wall Street joined world stock markets in a precipitous plunge Friday, with the Dow Jones industrials dropping more than 300 points in early trading. The growing belief that the world will suffer a punishing economic recession has investors furiously dumping stocks.

The massive decline was caused by increasingly grim news from overseas. In Japan, shares of Sony sank more than 14 percent after it slashed its earnings forecast for the fiscal year. In Germany, Daimler's stock dropped 11.4 percent in morning trading after it reported lower third-quarter earnings and abandoned its 2008 profit and revenue guidance.

Japan's Nikkei stock average fell a staggering 9.60 percent. In Europe, Germany's benchmark DAX index was down 9 percent, France's CAC40 dropped 8.9 percent while Britain's FTSE 100 sank 8.2 percent after the government said its gross domestic product fell 0.5 percent in the third quarter, putting the country on the brink of recession.

The dour outlook convinced investors that the world economy is headed for a long and severe downturn despite a raft of government rescue efforts aimed at pulling the financial system from the brink. It also indicated that the tremors caused by the global credit crisis may have only begun to be felt in their true scope and magnitude.

"There's a lot of panic out there today," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. "People have been saying that we're in a recession. This is the realization."

Fearing more carnage in world equity markets, big hedge funds and other institutional investors have been pulling out their money en masse in a bid to reduce risk and raise cash -- a process known as deleveraging that only intensifies the selling. Meanwhile, individual investors that have seen their holdings decimated in recent weeks have been yanking money out of mutual funds, adding to the downward pressure on markets.

"I think it would be natural to make an assumption that there are some funds in trouble and that we may see some funds shut down," Fullman said.

In the first hour of trading, the Dow fell 378.33, or 4.35 percent, to 8,312.9 after falling 500 soon after the opening bell.

Broader stock indicators also fell. The S&P 500 index fell 44.33, or 4.88 percent, to 863.78, and the Nasdaq composite index fell 74.13, or 4.62 percent, to 1,529.78.

The Russell 2000 index of smaller companies fell 22.15, or 4.52 percent, to 467.77.

On the New York Stock Exchange, 115 issues advanced while 2,630 declined. Volume came to 171.5 million shares.

The market's open was quieter than many on Wall Street had predicted. Investors had been bracing for a rocky start after futures contracts for the Dow and the S&P 500 fell so low they triggered "circuit breakers," which froze selling until the market's 9:30 a.m. EDT open. That slide raised the possibility that circuit breakers intended to prevent panic selling could be triggered during regular trading -- something that hasn't happened since 1997.

The thresholds that would trigger a halt in trading are set at a decline of 10 percent, 20 percent and 30 percent in the Dow, based on where that index was at the beginning of the current quarter; that would mean declines of 1,100 points, 2,200 points and 3,300 points, respectively.

If the Dow Jones industrial average falls 1,100 points before 2 p.m., the market will shut down for an hour. If the threshold is breached between 2 p.m. and 2:30 p.m., the halt will last 30 minutes. Trading would stop again if the Dow falls by 2,200 points. If the Dow falls by 3,300 points at any time, trading would be halted for the day.

Still, the final hour of trading is a crucial period as well, with many inventors trying to square away their positions at the last minute.

Gary Townsend, president and CEO of Hill-Townsend Capital Inc., said a halt in trading was a possibility.

"It's a way of smoothing market activity and making it orderly. No one would like to see it," he said.

Elsewhere in Asia on Friday, Hong Kong's Hang Seng index fell 8.3 percent to 12,618. Markets in India, Thailand, Indonesia and the Philippines were also down sharply as investors bailed from emerging markets to cut their exposure to risky assets and meet redemption needs at home.

The intensifiying gloom over growth expectations is having the added impact of putting small economies and currencies under extreme pressure. Investors are pulling money out of countries in Eastern Europe, Latin America and Asia on fears vulnerable countries will not only be hit hard by the financial crisis but may also default on debt.

In Europe, for example, Hungary, Ukraine and Belarus are all, like Iceland, in talks with the IMF to discuss possible loans.

Meanwhile, demand for U.S. Treasurys jumped as investors sought safe places to put their money. The three-month bill, regarded as the safest asset around, yielded 0.78 percent, down from 0.94 percent late Thursday.

There were signs that credit markets continue to thaw but are doing so more slowly amid growing economic fears. The rate on three-month loans in dollars -- known as the London Interbank Offered Rate, or Libor -- fell to 3.52 percent from 3.54 percent on Thursday.

The rates have fallen steadily for 10 days as confidence in the banking industry has been helped somewhat by government rescue measures. However, the improvements were smaller Friday on widening concerns about the health of the global economy.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.58 from 3.66 percent late Thursday.

The U.S. dollar, meanwhile, plunged below 93 yen, a 13-year low, as traders reacted to dismal U.S. jobs data that spurred speculation the Federal Reserve might cut interest rates. Meanwhile, gold prices plunged as low as $681 an ounce, the lowest trading level since Jan. 11, 2007.

Light, sweet crude fell $3.66 to $64.18 on the New York Mercantile Exchange. The sell-off, another sign that investors fear a severe recession, came despite OPEC's announcement that it will cut production by 1.5 million barrels a day in a bid to shore up sagging prices.

Stocks turn higher as investors hunt for bargains

Wall Street turned higher in erratic trading Thursday as investors, while still nervous about growing signs of a weakening economy, picked up bargains from stocks that were beaten down in a two-day selloff. The Dow Jones industrial average rose 180 points and outpaced the gains of other major indexes as energy stocks bounced higher from a drop in oil.

There was little confidence behind the buying; investors were attracted to stocks that were pummeled in two days of selling that sliced nearly 750 points off the Dow. There is a growing belief on the Street that the economy is either in a recession or headed for one despite government relief efforts and gradual improvements in world credit markets.

With its move higher, Wall Street is living up to predictions that trading will remain volatile for some time to come as investors try to test whether the market has formed a bottom.

"It's people coming in that see tremendous value, but for a more sustainable advance I think we need more time," said Steven Goldman, chief market strategist at Weeden & Co. in Greenwich, Conn.

Wall Street digested a rush of corporate news. Goldman Sachs Group Inc. is preparing to cut about 10 percent of its work force, according to a person briefed on the plan who requested anonymity because the company hadn't publicly disclosed details of the plan.

Meanwhile, drugmaker Eli Lilly and Co. said it booked a loss for the third quarter on a charge of almost $1.5 billion for an expected settlement of an investigation into the marketing of its top-selling drug, Zyprexa. Dow Chemical Co. said its quarterly profit rose 6 percent, helped by price hikes that offset a nearly 50 percent increase in raw materials and energy costs.

A snapshot of the labor market signaled that it continues to weaken. The Labor Department reported Thursday that new applications for unemployment benefits rose 15,000 last week to a seasonally adjusted 478,000. That was slightly above analysts' estimates of 470,000. Jobless claims above 400,000 are considered a sign of recession. A year ago, claims stood at 333,000, the department said. Analysts caution, however, that the weekly readings can be volatile.

Investors viewed the data as more evidence that the financial crisis is battering the economy and forcing companies to cut back. Market anxiety was already high as investors sift through a batch of corporate forecasts that has stirred intense unease about the health of the global economy.

Thomas J. Lee, U.S. equities strategist at JPMorgan Chase & Co. in New York, cautioned that the market will need to rein in its sharp swings before some investors will feel confident enough to return.

"I don't think anyone can buy and sell stocks right now with conviction," he said.

The Dow rose 182.47, or 2.14 percent, to 8,701.68 after earlier falling 125 and rising more than 277. On Wednesday, the Dow lost 514 points as investors worried that the global economy is poised to weaken. That was on top of a 231-point loss Tuesday.

Broader stock indicators also rose after showing early declines. The Standard & Poor's 500 index advanced 15.35, or 1.71 percent, to 912.13, and the Nasdaq composite index rose 4.55, or 0.28 percent, to 1,620.30.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 460.5 million shares.

Credit markets continued to show signs of slow improvement, although figures released Thursday suggested a return to more normal market conditions will take time. The rate on three-month loans in dollars -- known as the London Interbank Offered Rate, or Libor -- was unchanged at 3.54 percent. The rate fell to that level on Wednesday and is the lowest since Sept. 24.

Demand for short-term Treasury bills, regarded as the safest assets around, was little changed. The three-month Treasury bill yielded 1 percent, down from 1.01 percent late Wednesday. The levels are a notable improvement from the 0.20 percent seen last week, when investors were willing to trade the slimmest of returns for a safe place to keep their money.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.65 percent from 3.60 percent late Wednesday.

The dollar was mixed against rival currencies after jumping to multiyear highs Wednesday, while gold prices fell.

Light, sweet crude rose $1.73 to $68.48 on the New York Mercantile Exchange. The contract on Wednesday fell to a new 16-month low as big increases in U.S. crude and gasoline stocks fed beliefs that the economic downturn is eroding demand for energy.

The rise in oil gave a lift to energy companies and helped ease some worries about the economy, according to Ryan Larson, head of equity trading at Voyageur Asset Management, a subsidiary of RBC Dain Rauscher in Chicago. While the stock market often cheers a drop in oil, recent declines have worried some investors that they portended a falloff in economic activity.

"You're seeing a connection between oil and the markets, and we're seeing a bounce," Larson said. "The market is thinking maybe the slowdown might not be as imminent as we first thought, or maybe its priced into the market."

Oil fell Wednesday to its lowest level in 16 months, hurting energy stocks. But the rebound sent them higher Thursday. Exxon Mobil Corp. rose $3.82, or 5.9 percent, to $68.39, while Chevron Corp. advanced $3.77, or 6.1 percent, to $65.51.

Goldman Sachs fell $7, or 6.1 percent, to $107.71. Eli Lilly rose $1.30, or 4.1 percent, to $33.41, while Dow Chemical rose $1.65, or 7.5 percent, to $23.76.

The Russell 2000 index of smaller companies fell 1.80, or 0.36 percent, to 500.17.

Overseas, Japan's Nikkei stock average fell 2.46 percent. Britain's FTSE 100 fell 0.25 percent, Germany's DAX index fell 1.50 percent, and France's CAC-40 lost 1.57 percent.