KEY POINTS:
US stocks fell to five-year lows yesterday as investors grappled with an increasingly dire outlook for the global economy following a raft of disappointing profits and outlooks from major US companies.
Boeing's shares fell 7.5 per cent after the aircraft maker reported a steep drop in quarterly profit and warned it might need to provide financing to some of its customers in 2009.
The Dow Jones industrial average fell 514.45 points, or 5.69 per cent, to 8519.21. The Standard & Poor's 500 Index slid 58.27 points, or 6.10 per cent, to 896.78, its lowest closing level since April 2003.
Wachovia yesterday reported a staggering US$24 billion ($40.45 billion) loss as it took a goodwill impairment charge of nearly US$19 billion ahead of its acquisition by Wells Fargo.
It is the biggest quarterly loss of any bank since the onset of the credit crunch, even greater than the US$12 billion loss by Swiss bank UBS in the first quarter
The North Carolina-based bank reported a loss after paying preferred dividends of US$23.89 billion in the period ended September 30, compared with earnings of US$1.62 billion a year earlier.
Excluding goodwill impairment of US$18.7 billion and merger-related and restructuring expense of US$414 million, the bank lost US$4.76 billion.
The bank said its acquisition by Wells Fargo, in an all-stock deal currently valued at about US$14 billion, is on track to close in the fourth quarter.
A majority of the US$18.7 billion writedown relates to the bank's retail and small business unit, under which its Pick-a-Pay mortgage portfolio is included. Wachovia was forced to write down the value of these assets because they were considered overvalued.
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