Stocks fall as investors look to Fed meeting

NEW YORK -- Stocks fell again today as investors awaiting next week's Federal Reserve meeting faced renewed concerns about the fallout from weakness in the credit markets.

While the market is looking for the Fed to again lower interest rates the size of the cut, if any, is under debate. Despite prospects of a rate cut, economic concerns weighed on investors.

JPMorgan downgraded major securities firms on Wall Street amid a decline in the debt markets and a slowdown in growth of revenue. The downgrade affected Wall Street's biggest players: Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Morgan Stanley.

In midmorning trading, the Dow Jones industrial average fell 38.12, or 0.29 percent, to 13,276.45. The blue chip index came off of lows seen shortly after the opening bell.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 7.29, or 0.50 percent, to 1,465.13, and the Nasdaq composite index fell 9.22, or 0.35 percent, to 2,627.91.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.86 percent from 3.85 percent late Monday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude fell $1.09 to $88.22 per barrel on the New York Mercantile Exchange amid speculation that OPEC will raise production when it meets Wednesday. Also, a U.S. intelligence report that concluded Iran halted its nuclear weapons development program in 2003 helped push prices lower.

As it tries to determine the Fed's move, Wall Street is anxious for the arrival of the November employment report, which is due Friday. It could indicate the direction of consumer spending, which is seen as crucial to maintaining economic growth.

With many on Wall Street expecting the Fed to cut interest rates, the debate has shifted to whether the cut will come in a quarter point or a half percentage point after a rate reduction at each of its last two meetings. The bank's key rate now stands at 4.5 percent.

Beyond broader economic concerns, investors looked to corporate news for clues about the health of the economy.

Financial stocks fell after downbeat comments from analysts. JPMorgan's Kenneth Worthington warned that while further write-offs of bad mortgage debt might soon help stocks, longer-term concerns about risk-management at the firms might hurt their overall valuation.

Goldman fell $5.01, or 2.2 percent, to $221.88, while Lehman fell $1.70, or 2.8 percent, to $59.68. Merrill fell $1.52, or 2.6 percent, to $57.54, while Morgan fell $2.75, or 5.3 percent, to $49.53.

News from some big companies did little to boost Wall Street's mood.

Merck & Co., one of the 30 companies that comprise the Dow Jones industrial average, affirmed its 2007 profit forecast and predicted higher sales of its human papilloma virus vaccine Gardasil and diabetes treatment Januvia would drive earnings growth next year. The drug developer also said it still expects to eliminate 7,000 jobs by the end of 2008, having cut 6,000 positions as of Sept. 30. Merck fell $1.52, or 2.6 percent, to $56.25.

Nokia Corp. fell $1.34, or 3.3 percent, to $38.90 after predicting the global market for mobile devices to grow 10 percent in 2008 and that its share will increase. However, the world's largest mobile phone maker disappointed investors with its targets for its operating margin.

Sirius Satellite Radio Inc.'s acquisition of rival XM Satellite Radio Holdings Inc. might not win regulatory approval by a Tuesday deadline, contends Cowen & Co. analyst Thomas Watts. While shareholders approved the $5 billion plan last month, it might not win all the governmental approvals it needs before the Federal Communications Commission's 180-day review period expires. Sirius fell 18 cents, or 4.8 percent, to $3.57, while XM fell 93 cents, or 5.9 percent, to $14.90.

Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where volume came to 243.9 million shares.

The Russell 2000 index of smaller companies fell 5.85, or 0.77 percent, to 754.12.

Overseas, Japan's Nikkei stock average closed down 0.95 percent, while Hong Kong's Hang Seng index rose 0.77 percent. In afternoon trading, Britain's FTSE 100 fell 0.85 percent, Germany's DAX index slipped 0.13 percent, and France's CAC-40 fell 1.36 percent.