The Nasdaq slipped and the broader market struggled Thursday after comments by the chief executive of troubled mortgage lender Countrywide Financial revived investor worries about the turmoil in the credit and mortgage markets. Stocks rose early in the session after Bank of America said it was making a $2 billion investment in Countrywide Financial. However, gains were short lived, with stocks falling by late morning. Countrywide's chief executive said in a television interview in the late morning that there is still a big liquidity problem and that the housing slump could lead the U.S. economy into recession. Meanwhile, the Congressional Budget Office (CBO) said Thursday that the U.S. budget deficit will shrink more than expected this year, due to a reasonably strong economy. However, the CBO voiced uncertainty about the future because of the housing slump. In economic news, a morning repot showed that the number of Americans filing new jobless claims fell last week by a smaller-than-expected 2,000 to 322,000. Separately, mortgage lenders cut 18,000 jobs this month, reflecting the fallout from the high-risk “sub-prime” lending market. Light sweet crude for October delivery rose 64 cents to $69.90 a barrel on the New York Mercantile Exchange. The Dow Jones industrial average finished virtually unchanged, falling 0.25 to 13,235.88. Home Depot fell 2 percent on reports that the sale of its wholesale supply division could be in trouble. Other Dow decliners included Walt Disney, Boeing, and Alcoa. Those losses were offset by gains from Hewlett-Packard, McDonald's, and IBM. The broader Standard & Poor's 500 index fell 1.57, or 0.1 percent, to 1,462.50. The technology-heavy Nasdaq composite index fell 11.10, or 0.4 percent, to 2,541.70. The New York Stock Exchange composite index rose 1.49 to 9,478.62. The American Stock Exchange composite index rose 10.31 to 2,215.80. And the Russell 2000 index fell 10.31 to 788.25.
