February 11, 2009 2:39 PM
- Text
Markets Drop Amid Mortgage Worries
(AP)
Wall Street's angst over the ongoing fallout from the credit crisis made for a turbulent end to a volatile week Friday - stocks tumbled, soared and then turned south again as investors tried to assess the dangers faced by the country's biggest mortgage financiers, Fannie Mae and Freddie Mac.
The Dow Jones industrial average, which traded down more than 250 points in the session, briefly moved into positive territory Friday before resuming its decline. The blue chips also fell below 10,000 for the first time in two years before recovering.
A new high for oil prices above $147 a barrel also weighed on stocks.
Investors' focus was on the fate of the government-chartered companies. Shares of Fannie Mae and Freddie Mac fell sharply during the week on concerns about their stability. Wall Street is worried that a collapse of the two financiers would cause further shock to the financial system, and trigger more losses to banks and brokerages with significant holdings of mortgage-backed securities.
The well-being of Fannie Mae and Freddie Mac is crucial because they hold or guarantee about $5 trillion worth of mortgages. Their troubles are just the latest depressing turn in a year-old credit crisis that shows no sign of ending, disappointing some stock traders who thought just months ago that the worst was perhaps over.
The Dow fell 128.48, or 1.14 percent, to 11,100.54 after having fallen to 10,977.68. It last traded below 11,000 on July 25, 2006.
Broader stock indicators also logged declines. The Standard & Poor's 500 index fell 13.90, or 1.11 percent, to 1,239.49, and the Nasdaq composite index fell 18.77, or 0.83 percent, to 2,239.08.
Friday's drop meant Wall Street moved squarely into a bear market, which is defined as a 20 percent drop from a recent peak. The Dow is down 21.6 percent from the record closing high of 14,164.53 it reached in October. The S&P 500 is down 20.8 percent and the Nasdaq is off 21.7 percent.
Oil, meanwhile, extended its move into record territory, rising as high as $147.27 amid tensions between the West and Iran. Light, sweet crude for August delivery settled up $3.43 at $145.08, slightly below a record close of $145.29 a barrel set more than a week earlier.
Bond prices fell sharply as investors worried a bailout of Fannie Mae and Freddie Mac could dent the government's credit rating. Ordinarily, bonds are seen as a safe haven during stock market pullbacks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.95 percent from 3.80 percent late Thursday.
The Dow Jones industrial average, which traded down more than 250 points in the session, briefly moved into positive territory Friday before resuming its decline. The blue chips also fell below 10,000 for the first time in two years before recovering.
A new high for oil prices above $147 a barrel also weighed on stocks.
Investors' focus was on the fate of the government-chartered companies. Shares of Fannie Mae and Freddie Mac fell sharply during the week on concerns about their stability. Wall Street is worried that a collapse of the two financiers would cause further shock to the financial system, and trigger more losses to banks and brokerages with significant holdings of mortgage-backed securities.
The well-being of Fannie Mae and Freddie Mac is crucial because they hold or guarantee about $5 trillion worth of mortgages. Their troubles are just the latest depressing turn in a year-old credit crisis that shows no sign of ending, disappointing some stock traders who thought just months ago that the worst was perhaps over.
The Dow fell 128.48, or 1.14 percent, to 11,100.54 after having fallen to 10,977.68. It last traded below 11,000 on July 25, 2006.
Broader stock indicators also logged declines. The Standard & Poor's 500 index fell 13.90, or 1.11 percent, to 1,239.49, and the Nasdaq composite index fell 18.77, or 0.83 percent, to 2,239.08.
Friday's drop meant Wall Street moved squarely into a bear market, which is defined as a 20 percent drop from a recent peak. The Dow is down 21.6 percent from the record closing high of 14,164.53 it reached in October. The S&P 500 is down 20.8 percent and the Nasdaq is off 21.7 percent.
Oil, meanwhile, extended its move into record territory, rising as high as $147.27 amid tensions between the West and Iran. Light, sweet crude for August delivery settled up $3.43 at $145.08, slightly below a record close of $145.29 a barrel set more than a week earlier.
Bond prices fell sharply as investors worried a bailout of Fannie Mae and Freddie Mac could dent the government's credit rating. Ordinarily, bonds are seen as a safe haven during stock market pullbacks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.95 percent from 3.80 percent late Thursday.
Latest Now in MoneyWatch
- Ohio unemployment hits 3-year-low
- Jill on Money: Retirement investing, allocation, long term care
- Could "web-lining" be dangerous?
- Insurers respond cautiously to contraceptive plan
- Judge: Legally, breastfeeding not related to pregnancy
- Budget deficit drops to $27 billion in January
- Why the Powerball Jackpot is part of my investment strategy
- Is the new VW Beetle diesel worth the money?
- Consumer sentiment highlights risks to recovery
- Valentine blues? 10 best cities to be single
- December trade deficit widens to $48.8 billion
- Alcatel-Lucent returns to profit in 2011
- 6 things never to say in a performance review
- $26B mortgage deal: Who gets the money?
- Friendly's CEO steps down
- Quarterly loss hits $3.3B at Postal Service
- Greeks rail against cuts as EU demands more
Latest CBS News Headlines
on Facebook
on CBS News
- 5 bankers arrested in UK tax inquiry
- UK gov't: Press must face tougher penalties
- Bahrain's ailing Gulf Air secures $80 million loan
- Pop queen Whitney Houston dies at age 48
on Facebook
- Whitney Houston 1963-2012
- Adele sings a cappella for Anderson Cooper
- Remembering Whitney Houston 1963-2012
on CBS News
