Overnight Markets: Wall Street retreats on foreclosure concerns

Wall Street retreated from five-month highs on Thursday after concern over growing legal scrutiny for “robo signer” mortgage practices sparked a sell-off in financials.

The Dow Jones industrial average dipped two points, or 0.01%, to 11,095. The Standard & Poor's 500 dropped four points, or 0.36%, to 1,174. The Nasdaq Composite shed six points, or 0.24%, to 2,435.

Banking shares led the decline amid growing fears the foreclosure problems could bleed into the broader credit markets and the economy. All 50 US states are investigating the mortgage industry, and investors fear it will hurt bank earnings. JPMorgan Chase lost 2.8% and Bank of America fell 5.2%, while the KBW bank index dropped 2.6%.

A report that producer prices were growing faster than consumer prices further added to the gloom. The PPI grew 4% in September year-over-year, versus 1.1% for the CPI as of August.

In other corporate news, Apollo Group plunged 23.2%, dragging the stocks of for-profit education companies down to six-week lows, after the sector bellwether forecast sharp drops in new student enrollments.

However, the technology sector continued to show strength, with Google up more than 9% after beating Wall Street's expectations. Advanced Micro Devices Inc surged more than 7%.

Yahoo climbed 4.5% amid reports that it had engaged Goldman Sachs in order to defend the company from private equity groups.

In current trading, Asian stocks were trading lower on Friday in response to the unexpected increase in the US initial jobless claims, sparking concern about the strength of the world’s biggest economy.

The MSCI Asia Pacific Index declined 0.6% to 131 as of 10:47 a.m. in Tokyo. The S&P/ASX 200 Index slipped 0.5%. Japan’s Nikkei 225 Stock Average dropped 0.7%. South Korea’s Kospi index slid 0.1%. Shanghai Composite Index was trading up 0.8% at 2,882.

In company news, Canon decreased 1.5% in Tokyo as the yen reached a 15-year high against the dollar yesterday. BHP Billiton lost 0.3% in Sydney after crude prices fell in New York. Mizuho Financial Group fell 2.5%.