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United States stocks dropped last week, resuming a two-month slump, after home sales fell more than economists forecast and bond investor Bill Gross predicted 1 trillion U.S. dollars of losses for banks and brokerages.

All of the 23 developed nations in the MSCI World Index except for Canada have experienced bear-market plunges of 20 percent or more since September as credit losses surged and record commodity prices stoked inflation. Brazil last week became the 23rd out of 25 developing countries in the MSCI Emerging Markets Index to enter a bear market. Only Jordan and Morocco avoided such slumps.

Stocks have declined since October as financial institutions worldwide suffered 467.9 billion dollars in writedowns and credit losses. That prompted economists to forecast 1.5 percent growth in the U.S. economy in 2008, the slowest since 2001. Equities also suffered as inflation increased, giving the U.S. consumer price index the steepest gain since 1991.

Gross, who manages the world’s biggest bond fund, said last Thursday that falling U.S. home prices will force financial firms to write down 1 trillion dollars from their balance sheets, crimping bank lending and sparking sales of assets.

Tags: anc, crease, economist, stock

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