The Standard & Poor's 500 index edged lower at midday Thursday, as investors were skittish after a credit ratings agency raised questions about Countrywide Financial Corp.'s debt and Microsoft Inc. walked away from a buyout of Yahoo Inc.
The S&P 500 lost 5.48 points to 1,408.42.
Shares of Countrywide plunged 96 cents, or 16.1 percent, to $5.02. On Monday, credit ratings agency Fitch Ratings moved all the mortgage lender's ratings on "evolving" from "positive" watch, meaning the mortgage lender could be upgraded or downgraded. The change reflects uncertainty over how Countrywide's debt will be treated once its acquisition by Bank of America Corp. is complete.
Separately, Friedman, Billings, Ramsey analyst Paul Miller Jr. downgraded the stock to "Underperform," from "Market Perform," and slashed his price target to $2 from $7, citing continued deterioration in the bank's outstanding loans and weak pricing for loans on the secondary market. He said Bank of America could try to renegotiate the deal at a substantially lower price.
Shares of Yahoo dropped $3.84, or 13.4 percent, to $24.83 after Microsoft gave up on a $47.5 billion takeover bid of the Internet search engine.
Shares of mortgage guarantor Freddie Mac shed $2.15, or 7.9 percent, to $24.94 a day ahead of its first-quarter report, in which Wall Street expects it to report a loss.
Among the gainers, coal miner Consol Energy Inc. jumped $4.39, or 5.2 percent, to $88.68, reflecting a spike in shares across the industry following a strong first-quarter report from competitor Alpha Natural Resources.
Shares of Sprint Nextel Corp. added 35 cents, or 4.4 percent, to $8.24 amid reports that Deutsche Telekom AG, the parent of T-Mobile, might make a buyout offer of the beleaguered telecom.
And shares of Freeport McMoran Copper & Gold gained $4.40, or 4 percent, to $114.63 as gold prices climbed.
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