US STOCKS-Banks drag Wall St lower over foreclosure uncertainty

* Banks slide on worries about nationwide mortgage probe

* Initial jobless claims rise more than expected

* Apollo Group tumbles, for-profit sector follows

* Dow off 0.5 pct, S&P down 0.8 pct, Nasdaq off 0.6 pct

* For up-to-the-minute market news see [STXNEWS/US]
(Updates to late afternoon, changes byline)

By Rodrigo Campos

NEW YORK, Oct 14 (BestGrowthStock) – Bank shares led the Dow and
the S&P 500 lower on Thursday, reflecting investors’ fears of
how a nationwide probe into the mortgage industry’s foreclosure
practices might affect earnings.

JPMorgan Chase & Co (JPM.N: ) and Bank of America (BAC.N: ),
down 4 percent and 6 percent respectively, ranked among the
heaviest weights on the Dow, while the KBW bank index (.BKX: )
dropped 3.6 percent.

All 50 U.S. states are investigating the mortgage industry,and investors are growing concerned it will hit the battered
housing market and economy, imperiling the strong advances in
stocks over the past 5 weeks.[ID:nN14114592].

“We had started looking (forward) to normalized bank
earnings in 2012 or 2011,” said Gary Flam, portfolio manager at
Bel Air Investment Advisors in Los Angeles.

“The foreclosure issue is clearly putting into question
what those normalized earnings are going to be, and also
creates some some instability in the housing market, which is
key for consumers.”

The Dow Jones industrial average (.DJI: ) dropped 56.19
points, or 0.51 percent, to 11,039.89. The Standard & Poor’s
500 Index (.SPX: ) fell 9.81 points, or 0.83 percent, to
1,168.29. The Nasdaq Composite Index (.IXIC: ) lost 15.49 points,
or 0.63 percent, to 2,425.74.

Apollo Group’s (APOL.O: ) plunge dragged the for-profit
education stocks to 6-week lows after the sector bellwether
withdrew its 2011 outlook and forecast sharp falls in new
student enrollments..

Apollo shares sank 25.5 percent to $36.87 and led declines
in the Nasdaq 100 (.NDX: ).

The U.S. dollar’s slide limited stocks’ losses, as a weaker
greenback puts a bid under commodities and other assets
denominated in the U.S. currency.

New claims for jobless benefits unexpectedly rose in the
latest week. The data reinforced the view that the Federal
Reserve will engage in another round of money printing to
support a sluggish economic recovery. [ID:nN14277059].

The U.S. dollar fell to a 2010 low against a basket of
major currencies (.DXY: ) after Singapore expanded its currency
trading band, driving the Singapore dollar to a record high.

The prospect of additional Fed stimulus has created an
inverse correlation between the dollar and stocks, with a drop
in the greenback sparking a move into equities.

Google Inc (Read more about Google Stock Analysis) (GOOG.O: ) shares slid 1 percent to $537.62 and
helped pressure the Nasdaq as investors await the release of
the Internet giant’s earnings after the closing bell.

Traders in Google options looked they were pricing in a
potential post-earnings move of just over 4 percent in the
stock’s price, which is down from the average swing of 6
percent over the past four quarters. [ID:nN14104358].

But a bright spot was provided by Yahoo Inc (YHOO.O: ), up
4.2 percent at $15.89 after a source said several private
equity firms had approached Internet and media companies,
including News Corp (NWSA.O: ) and AOL Inc (AOL.N: ), to gauge
their interest in buying the company. [ID:nN13281610].
(Reporting by Rodrigo Campos; Additional reporting by Ryan
Vlastelica; Editing by Jan Paschal)

US STOCKS-Banks drag Wall St lower over foreclosure uncertainty