US Stocks Retreat on Inflation Concern, Housing Data, Losses

U.S. stocks tumbled for a second day after wholesale prices climbed twice as fast as economists projected, housing starts fell and concern grew that the nation's biggest financial firms will post more losses.

American International Group Inc., the world's largest insurer, and Lehman Brothers Holdings Inc., the biggest mortgage- bond underwriter, retreated more than 3 percent after analysts warned of additional credit writedowns. D.R. Horton Inc. lost 1.1 percent as the government said builders broke ground on the fewest houses in 17 years last month. Staples Inc. retreated 7.4 percent after producer prices increased 1.2 percent in July and the retailer said profit decreased.

The Standard & Poor's 500 Index lost 5.67 points, or 0.4 percent, to 1,272.93 at 9:41 a.m. in New York. The Dow Jones Industrial Average declined 72.55, or 0.6 percent, to 11,406.84. The Nasdaq Composite Index slipped 10.84, or 0.5 percent, to 2,406.14. Three stocks dropped for each that rose on the New York Stock Exchange.

``Inflation is certainly a problem,'' said Dan Veru, who helps manage $2.8 billion at Palisade Capital Management in Fort Lee, New Jersey. ``All the investment banks and the investment banking subsidiaries of commercial banks are going to suffer, because there's not going to be as much profitability from the business anymore.''