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Bloomberg NewsNov. 7 (Bloomberg) -- U.S. stocks fell, erasing their gains since the Federal Reserve's Sept. 18 interest-rate cut, after New York expanded its probe of the mortgage industry, General Motors Corp. posted a record loss and the dollar tumbled.
Washington Mutual Inc., the largest U.S. savings and loan, declined the most in 20 years after New York Attorney General Andrew Cuomo said there's a ``pattern of collusion'' in the bank's home-loan appraisals. Fannie Mae posted its steepest drop since 2005 and Freddie Mac sank to a seven-year low after Cuomo subpoenaed the two biggest U.S. providers of mortgage financing. GM slid after writing down $39 billion in tax benefits.
The Standard & Poor's 500 Index lost 44.65, or 2.9 percent, to 1,475.62, its biggest drop since Aug. 9 and lowest level since Sept. 12. The Dow Jones Industrial Average retreated 360.92, or 2.6 percent, to 13,300.02. The Nasdaq Composite Index decreased 76.42, or 2.7 percent, to 2,748.76. More than 12 stocks fell for every one that gained on the New York Stock Exchange.
``Is there another shoe to drop in financial services? Does the dollar continue its dive? Those are the issues that the market is responding to,'' said Matthew Kaufler, who helps manage $2.6 billion at Clover Capital Management in Rochester, New York.
The collapse of the subprime mortgage market has dragged financial shares down 18 percent this year, prompted the Fed to cut interest rates and accelerated a sell-off in the U.S. currency. The dollar fell to the lowest in 30 years against a basket of six rivals today after Chinese officials said they plan to move some of the nation's $1.43 trillion of foreign-exchange reserves into stronger currencies.
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