Oil prices, Bhutto death batter stocks

Stocks tumbled today on bad news on the economy and worse geopolitical news.

The Dow Jones industrials closed down 192 points, or 1.4%, to 13,360. The Standard & Poor's 500 Index was down 21 points, or 1.4%, to 1,476, and the Nasdaq Composite Index slumped nearly 48 points, or 1.8%, to 2,677.

It was the market's worst one-day performance since Dec. 11. If there was any saving grace to the loss, it came during a holiday week with light volume. New York Exchange volume was less than 1 billion shares. The Nasdaq saw barely 1.2 billion shares change hands, about half of normal volume.

• Get free, real-time stock quotes on MSN Money

The selling started with a weaker-than-expected report on durable-goods orders and worsened with a jump in oil prices on a report showing a bigger-than-expected decline in domestic inventories.

Crude oil in New York closed up 68 cents a barrel to $96.62 this afternoon in New York. It had been quoted as high as $97.79 after the government reported that crude inventories fell by 3.3 million barrels last week to 293.6 million barrels. Analysts had expected a smaller decline of 1.2 million barrels.

But the assassination of former Pakistani Prime Minister Benazir Bhutto in Rawalpindi cast a pall on trading all day. Bhutto was murdered after a rally late this afternoon local time.

• Video: How Bhutto's death roiled markets

Stock markets in Europe and North America slumped on the news because of fears that Pakistan, which has been an ally in the war on terrorism and possesses an arsenal of nuclear weapons, might spin out of control.

• More on Benazir Bhutto's death

At the same time, financial stocks generally were weak all day after a Goldman Sachs analyst predicted that Citigroup, Merrill Lynch and JPMorgan Chase face additional asset write-downs.

Citigroup finished the day down 2.9% to $29.56 and was the second-worst Dow performer today, just ahead of American Express (AXP, news, msgs), a fellow financial company, which closed down 3.4% to $51.10.

All 30 Dow stocks were lower on the day. The leader was Johnson & Johnson (JNJ, news, msgs), but it was down 0.3% to $67.33. Fewer than 50 S&P 500 stocks were showing gains, led by Freddie Mac (FRE, news, msgs) and Fannie Mae (FNM, news, msgs), up 4% to $33.70 and 2.1% to $39.61, respectively. The shares jumped after their regulator, the Office of Federal Housing Enterprise Oversight, said both were adequately capitalized as of Sept. 30.

Only four Nasdaq-100 stocks were higher today: Baidu.com (BIDU, news, msgs), the Chinese search engine, up 2.4% to $409.20; Amazon.com (AMZN, news, msgs), up 1.5% to $94.25; Oracle (ORCL, news, msgs), up 4 cents to $23.04; and Sun Microsystems (JAVA, news, msgs), up a penny to $18.32.

Apple (AAPL, news, msgs) hit a new intraday high of $202.96 but fell back at the close to $198.57, down 0.2%. It was the second day in a row that the stock couldn't hold $200.

Energy prices -- New York close

	Thur.	Wed.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$96.62	$95.97	$0.65	8.92%	58.26%
Heating oil (per gallon)	$2.6803	$2.6412	$0.0391	5.96%	67.74%
Natural gas (per million BTU)	$7.1700	$7.0460	$0.1240	-1.81%	13.83%
Unleaded gasoline (per gallon)	$2.4962	$2.4526	$0.0436	10.50%	55.81%

Despite today, the Dow is up 7.2% in '07

Given all the volatility since last summer, it may surprise some that 2007 has been a fairly good year for stocks.

With two trading days left for the year, the Dow is up 7.2% in 2007, led by Honeywell International (HON, news, msgs), up 35%, and Merck (MRK, news, msgs), up 34%.

The S&P 500 is up 4.1%, led by National Oilwell Varco (NOV, news, msgs), up 145%, and Jacobs Engineering (JEC, news, msgs), up 140%.

The Nasdaq is up 10.8%. But that gain masks an even bigger gain -- nearly 21% -- for the Nasdaq-100 index, which includes the likes of Apple, up 134% this year; Google (GOOG, news, msgs), up 52.2%; Research in Motion (RIMM, news, msgs), up 176%; and Amazon.com (AMZN, news, msgs), up 139%.

At the same time, the differential between the Nasdaq and the Nasdaq-100 points up a difficult year for smaller stocks. The Russell 2000 Index ($RUT.X), which tracks small-cap stocks, is down 1.8% on the year.

Durable-goods orders miss estimates

Orders for durable goods fell short of estimates for November, rising 0.1% rather than the 2.9% gain predicted by economists.

The slight gain followed a revised 0.4% drop in October. November's increase was hindered by a slump in new orders for defense aircraft and equipment, as well as weakening demand for capital goods. Excluding orders for non-defense aircraft, capital-goods orders fell 0.4%.

Goldman's gloomy forecast for financials

Goldman Sachs has some dark expectations for Citigroup. Analyst William Tanona wrote in a note to clients that Citi will likely increase the amount of write-downs to $18.7 billion, above a previous estimate of $11 billion. Tanona also said the banking giant might be forced to cut its dividend by 40% to preserve capital.

• Talk back: What's your No. 1 money wish for 2008?

"It will be a couple of quarters before the current credit crisis is fully digested by the markets," Tanona wrote.

The Goldman analyst also expects Merrill Lynch to write down $11.5 billion -- ahead of an earlier forecast of $6 billion in write-downs -- and JPMorgan Chase to write down $3.4 billion, rather than the $1.7 billion he had predicted earlier.

Consumer confidence rises

On a more positive note, the Conference Board's index of consumer confidence rose to a reading of 88.6 in December, up from a revised reading of 87.8 in November.

The figure is still well below the December 2006 level of 110. Nonetheless, this month's reading was the first gain in five months.

• Video: Inside the consumer-confidence numbers

Economists had expected the index to decline to 86.5.

Mortgage applications fall

The number of applications for mortgages fell by 7.6% for the week ending Dec. 21, the Mortgage Bankers Association said today. The MBA's mortgage application index fell to a reading of 603.8 from a reading of 653.8 the week before.

The association's index hit a high of 1,856.7 the last week of May 2003, when the housing market was booming.

The MBA's weekly survey showed that applications to refinance existing homes fell 8.5% on a seasonally adjusted basis.

Sallie Mae to boost capital

Troubled government-backed student-loan lender Sallie Mae (SLM, news, msgs) late Wednesday announced that it is taking steps to help raise $2.5 billion in capital.

Sallie Mae said it will issue new batches of common and convertible stock. It will apply $2 billion to settle a contract to buy back its own stock.

• Video: Where to invest in 2008

Investors weren't pleased with news of the dilution. Sallie Mae shares fell 11% to $19.65 this afternoon; the stock has fallen nearly 60% this year.

Sallie Mae manages $160 billion in education loans, according to the company's press release.

Wal-Mart gift-card worries

With retailers banking on post-holiday gift-card redemptions to boost their bottom lines, Wal-Mart Stores (WMT, news, msgs) could be in some hot water.

The discount retail giant said in a statement late Wednesday that it was having trouble processing some gift cards. The company said that a third party that verifies the cards was struggling with a processing error, causing delays.

"We are working with the supplier to resolve the issue as quickly as possible," Wal-Mart said in a statement, according to The Associated Press.

Shares of Wal-Mart were down 1.3% to $47.77.

Apple joins forces with movie studio

Movie fans who don't want to wait months to rent their favorite flicks on DVD won't have to for much longer.

Fans of News Corp.'s (NWS, news, msgs) 20th Century Fox movies will soon be able to rent the studio's new releases through Apple's iTunes, The Financial Times reported.

An announcement is expected at Apple's MacWorld convention on Jan. 14, the paper added.

Walt Disney (DIS, news, msgs) already sells its new movie releases via iTunes but does not yet allow rentals, the paper reported.

Shares of News Corp. shed 1.7% to $20.71; Disney shares were down 1.2% to $32.43.

All fans can watch Giants-Patriots

In a reversal, CBS (CBS, news, msgs) and General Electric's (GE, news, msgs) NBC have said they will be able to simulcast the New York Giants playing the New England Patriots on Saturday night.

• Video: NFL Network punts

The decision to allow the networks to air the game follows weeks of denials by the NFL that the game would be shown anywhere other than the NFL Network.

Saturday night's game could make history. If the Patriots win, they will be only the second NFL team to go undefeated in the regular season -- and the first since the season was lengthened to 16 games.

Many cable companies have refused to carry the NFL Network in their basic cable packages; only 40% of U.S. homes subscribe to the NFL Network.

Short hits from the markets -- 4 p.m. ET

	Thur.	Wed.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	3.075%	3.225%	-0.150	0.16%	-37.05%
5-year Treasury note yield	3.617%	3.707%	-0.090	5.82%	-23.06%
10-year Treasury note yield	4.199%	4.281%	-0.082	5.72%	-10.85%
30-year Treasury bond yield	4.614%	4.686%	-0.072	4.79%	-4.23%
Currencies
U.S. Dollar Index	76.595	77.180	-0.585	0.54%	-7.49%
British pound in U.S. dollars	$1.9968	$1.9841	0.0127	-2.94%	1.90%
U.S. dollar in British pounds	£0.5008	£0.5040	-0.0032	3.02%	-1.86%
Euro in U.S. dollars	1.4633	1.4489	0.0144	-0.16%	10.86%
U.S. dollar in euros	€ 0.6834	€ 0.6902	-0.0068	0.16%	-9.79%
U.S. dollar in yen	¥113.68	¥114.22	-0.54	2.45%	-4.49%
U.S. dollar in Canadian dollars	$0.980	$0.980	0.000	-1.89%	-15.85%
Canadian dollar in U.S. dollars	$1.020	$1.020	0.000	1.87%	18.88%
Commodities
Gold	$831.80	$829.50	$2.30	5.41%	30.38%
Copper	$3.1320	$3.1700	-$0.038	-1.65%	9.09%
Silver	$14.8180	$14.8180	-$0.02	4.61%	14.69%
Crude oil (NYMEX) (per barrel)	$96.62	$95.97	$0.65	8.92%	58.26%

By Charley Blaine and Elizabeth Strott