Stocks stumble on Pakistani strife

Major indexes slump on the assassination of former Pakistani Prime Minister Bhutto and mixed economic reports.

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NEW YORK ( -- Stocks slumped Thursday as investors mulled geopolitical concerns and reports on oil inventories, consumer confidence and factory orders.

The Dow Jones industrial average (INDU) was down nearly 0.9 percent. The broader S&P 500 (SPX.X) index shed nearly 0.8 percent 1-1/2 hours into the session. The tech-laden Nasdaq (COMPX) was down 0.9 percent.

Former Pakistani Prime Minister Benazir Bhutto was assassinated Thursday in a suicide attack in Rawalpindi, Pakistan. Investors worry that Bhutto's assassination could cause further political turmoil in Pakistan, a country with nuclear capabilities, and upset world markets, particularly the oil trade.

On the economic front, consumer confidence in December was slightly higher than expected, despite concerns about economic stability, according to the Conference Board's Consumer Confidence Index.

Meanwhile, the government's weekly oil inventory report showed a larger-than-expected drop in domestic crude supplies last week.

Also, the U.S. Commerce Department said factory orders for November came in lower than expected.

From the financial sector, Sallie Mae (SLM, Fortune 500) said Thursday that it needs to sell $205 billion worth stock to buy out certain contracts that have hindered the student lender's performance. The company also said it faces a class-action lawsuit alleging that the company steered minority students into more expensive loans, an allegation the company denied. Shares of Sallie Mae plunged nearly 6 percent in early trading.

In more bad news for Wall Street banks, Goldman Sachs analysts wrote Thursday that Citigroup (C, Fortune 500) could writedown as much as $18.7 billion in the fourth quarter and cut its dividend by 40 percent as the company struggles to overcome problems related to the credit crisis. Citibank stock was trading down nearly 2 percent in early actions.

The Goldman analysts also said that Merrill Lynch (MER, Fortune 500) and JPMorgan (JPM, Fortune 500) could see more writedowns.

Treasury prices rose, with the yield on the 10-year note falling to 4.22, down from 4.28 on Wednesday. Bond prices and yields move in opposite directions.

U.S. light crude oil for January delivery rose $1.28 to $97.25 on the New York Mercantile Exchange.

In currency trading, the dollar fell versus the euro and gained against the yen.

COMEX gold for February delivery rose $2.30 to $831.80 an ounce.  To top of page

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