NEW YORK (AP) — Stocks fell broadly for a second straight day Wednesday after the Federal Reserve rejected Bank of America's plan to increase its dividend and the Japanese government said that the recent earthquake and tsunami will be the most expensive natural disaster in history.
Rebuilding costs for the Japanese earthquake are expected to be more than $300 billion. The widespread devastation is expected to drag the growth rate of the Japanese economy down by 0.5 percent this year. Japanese companies such as Toyota and Honda have suspended production at some plants. Japan's benchmark Nikkei 225 index closed 1.7 percent lower.
The Standard and Poor's 500 index fell 4 points, or 0.3 percent, to 1,290. The Dow Jones industrial average fell 37, or 0.3 percent, to 11,982. The Nasdaq composite lost 20, or 0.8 percent, to 2,663.
Bank of America Corp. fell 3 percent after it said the Federal Reserve rejected its plan to raise its dividend in the second half of the year. The Fed allowed several major banks to increase their dividends last week after they passed stress tests. Banks slashed their payments to shareholders during the financial crisis to save cash. Bank of America said that it expects to submit another request to increase its dividend this year.
"This was obviously a disappointment," said Todd Salamone, the director of research at Schaeffer's Investment Research. "There seemed to be a growing consensus that financial stocks were looking more attractive based on the prospect of dividend increases."
Other banks also fell. Citigroup Inc. fell 1.4 percent and Wells Fargo & Co. fell 1.3 percent. Financial companies in the S&P 500 fell the most of all 10 company groups that make up the index.
In the latest bad news on the housing market, the Commerce Department reported that sales of new single-family homes plunged to the lowest on record in February. Home sales fell 17 percent to 250,000, well below the 700,000 rate that economists consider healthy. On Monday the National Association of Realtors said weak sales of existing homes and a high number of foreclosures pushed the prices of existing homes down to their lowest level in nearly 9 years.
European stocks fell broadly as investors refocused on Europe's debt problems. Portugal's government is expected to fall after opposition parties withdraw their support for another round of cutbacks aimed at averting a financial bailout. The Euro Stoxx 50, an index of European blue chips, fell 0.4 percent.
General Mills lost 2.6 percent despite beating analyst profit estimates after it said that sales in its cereal division were down 6 percent.
Oil prices neared $106 a barrel after violent protests in Yemen and Syria.
