After an initial gain on enthusiasm about Bank of America’s (NYSE: BAC; TYO: 8648) purchase of $2 billon in preferred stock in mortgage lender Countrywide Financial (NYSE: CFC), Wall Street was lower in midday trade Thursday.
The Dow Jones Industrial Average was down 0.28 percent to 13,199.47, while the Nasdaq Composite had dropped 0.71 percent to 2,534.56 and the S&P 500 was 0.44 percent lower to 1,457.61.
Bank of America said Wednesday that it would buy into Countrywide in an effort to help it deal with the increase in defaults on subprime loans was well as to try to keep the larger economy from being dragged down by the subprime mess.
The announcement came on the same day that Lehman Brothers (NYSE: LEH) said it will close its BNC Mortgage unit and cut over 1,000 jobs.
HSBC (NYSE: HBC; LSE: HSBA; Euronext: HSBC; SEHK: 005) and Accredited Home Lenders (NAS: LEND) have also announced the elimination of jobs due to the current crisis.
The announcement by Bank of America sent its shares up 16 cents to $51.81, while shares in Countrywide added $1.27 to $23.09.
Elsewhere, Hot Topic (NAS: HOTT) dropped 80 cents to $7.95 after the retailer said it suffered losses in the second quarter. Several other clothing retailers, including Gap (NYSE: GPS) and Aeropostale (NYSE: ARO), are scheduled to report after the close of trade today.
Meat processor Hormel Foods (NYSE: HRL) added 16 cents to $34.56 even though it said its profits in its fiscal third quarter were down by 4 percent.