Goldman Sachs tells investors to dump Citigroup stock

When America catches a cold Europe gets pneumonia. It's coming folks...

The Dow Jones dived a further 350 points yesterday, giving America’s key economic benchmark its worst June performance since the Great Depression, as oil hit a record and analysts said that the fallout from the credit crunch was far from over.

Citigroup’s shares fell by $1.18, or 6.26 per cent, to $17.67 in New York, their lowest since October 1998, after William Tanona, a Goldman Sachs analyst, tripled the net loss he expects the group to make in its second quarter to 75 cents a share, or $3.75 billion (£1.9 billion).

Shares in Merrill Lynch tumbled by $2.41, or 6.8 per cent, to $33.05, as Brad Hintz, an influential analyst with Sanford Bernstein, changed his second-quarter forecast for the group from an 82 cents a share profit to a loss of 93 cents a share, or $832 million.

The banks’ woes helped to push down the Dow Jones industrial average by 358.40, or 3 per cent, to 11,453.4, its lowest level since September 2006. Yesterday’s decline means the Dow is 9.4 per cent down this month, its worst percentage drop for June since the 18 per cent reduction recorded in June 1930. A fall of $1.38, or 11 per cent, in shares of General Motors, to $11.43 spooked investors further after a note from Goldman Sachs advised selling stock in the largest US carmaker. GM’s shares are at their lowest since 1954.

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