Stocks Retreat on Weak Economic Data

Financial stocks fell after Treasury Secretary Henry Paulson said the government should impose more regulation on the nation's investment banks. In a speech to the U.S. Chamber of Commerce, Paulson said the Bush administration will soon release a plan to promote a smoother functioning of financial markets.

The sector was also one of the biggest drags on the market after Oppenheimer & Co. analyst Meredith Whitney lowered her first-quarter profit forecasts for the nation's top four commercial banks. Citigroup Inc., the nation's largest bank by assets, fell $1.25, or 5.4 percent, to $22.16.

Other banks in the Dow dropped as well. Bank of America Corp. fell $1.22, or 3 percent, to $39.75, while JPMorgan Chase & Co. fell $1.83, or 4 percent, to $44.23.

In a sign of how bank woes are affecting companies outside the financial industry, private equity firms leading a $19.5 billion buyout of Clear Channel Communications Inc. were struggling to reach terms with the banks committed to financing the deal, according to a report by The Wall Street Journal. The report said the plan was close to collapse.

Clear Channel fell $5.46, or nearly 17 percent, to $27.10.

Meanwhile, electronic parts manufacturer Jabil Circuit Inc. posted a fiscal second-quarter loss and warned its third-quarter results will fall short of Wall Street's expectations. The disappointing results caused shares to plunge $1.94, or 17 percent, to $9.44.

The Russell 2000 index of smaller companies fell 5.41, or 0.77 percent, to 699.86.

Declining issues led advancers by 5 to 3 on the New York Stock Exchange, where volume came to 808.6 million.

Overseas, Japan's Nikkei stock average fell 0.30 percent. Britain's FTSE 100 fell 0.50 percent, Germany's DAX index fell 0.54 percent, and France's CAC-40 fell 0.33 percent.

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