US STOCKS-Wall St falls but ends off lows, banks slide

* Banks slide on worries about U.S.-wide mortgage probe

* Apollo Group tumbles, for-profit education sector follows

* Dow flat, S&P down 0.4 pct, Nasdaq off 0.2 pct

* For up-to-the-minute market news see [STXNEWS/US]
(Updates to close)

By Rodrigo Campos

NEW YORK, Oct 14 (BestGrowthStock) – Banks led U.S. stocks (Read more about the stock market today. ) lower on
Thursday as investors fretted a widening foreclosure crisis
could undermine the market’s strength over the last five
weeks.

The S&P 500 has rallied 11.9 percent since Sept. 1 and
volume has picked up from anemic levels. But the rally could
weaken as banks fell nearly 3 percent on Thursday over growing
fears the foreclosure problems could bleed into the broader
credit markets and the economy.

“As we all know, the market hates uncertainty and this is a
big one. Remember the subprime mess?,” said Joe Saluzzi,
co-head of trading at Themis Trading in Chatham, New Jersey.

Fears about lenders’ strength could be seen earlier in the
week in credit derivatives, as the cost of insuring bank debt
against default has jumped.

JPMorgan Chase & Co (JPM.N: ) lost 2.8 percent and Bank of
America (BAC.N: ) fell 5.2 percent, while the KBW bank index
(.BKX: ) dropped 2.6 percent.

The Dow Jones industrial average (.DJI: ) dipped 1.51 points,
or 0.01 percent, to 11,094.57. The Standard & Poor’s 500 (.SPX: )
dropped 4.29 points, or 0.36 percent, to 1,173.81. The Nasdaq
Composite (.IXIC: ) shed 5.85 points, or 0.24 percent, to
2,435.38.

About 9 billion shares traded on the New York Stock
Exchange, the American Stock Exchange and the Nasdaq, above
this year’s daily average of 8.78 billion.

All 50 U.S. states are investigating the mortgage industry,
and investors are growing concerned it will hurt bank earnings.
[ID:nN14114592].

To be sure, some say the foreclosure issues, which have
been brewing for weeks, were being used as an excuse for
investors to pull back from the solid gains since the beginning
of September.

The pickup in the last hour of trading, which erased most
of the Dow’s loss, could be evidence of that.

“You could use the bank story as an excuse, but after the
run-up we’ve had, the market needs a pullback,” said Jeffrey
Frankel, president of Stuart Frankel & Co in New York. “This is
healthy, not a bad situation.”

Google Inc (Read more about Google Stock Analysis) (GOOG.O: ) shares ticked 0.4 percent lower to
$540.90 during regular trading hours, but shot up more than 8
percent after the bell after the Internet giant’s results beat
quarterly profit expectations. [ID:nN14187391].

Apollo Group’s (APOL.O: ) shares plunged, dragging the stocks
of for-profit education companies down to six-week lows after
the sector bellwether withdrew its 2011 outlook and forecast
sharp drops in new student enrollments.

Apollo shares sank 23.2 percent to $38 and led declines in
the Nasdaq 100 (.NDX: ).

The U.S. dollar’s slide helped limit 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 printing money to
support a sluggish economic recovery. [ID:nN14277059].

Declining stocks outnumbered advancing ones on the NYSE by
a ratio of about 3 to 2, while on the Nasdaq, about seven
stocks fell for every six that rose.
(Reporting by Rodrigo Campos; Additional reporting by Caroline
Valetkevitch; Editing by Jan Paschal)

US STOCKS-Wall St falls but ends off lows, banks slide