Markets Drop Amid Mortgage Worries

Dow Falls 128 Points As Investors Assess Dangers Faced By Freddie Mac, Fannie Mae

(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.

[noloyalisti]

Actually this is the American way. Socialism for the rich (the corporations make all this money for the CEOs who get sent off with golden parachutes) and capitalism for the poor (we then have the corporation run government use our tax money to bail the corporations out) Couldn''t be simpler.

[baldwin2008]

If you want America to stop prostituting herself to other countries money then vote for the CONSTITUTION.

Vote for the Constitution Party for a REAL CHANGE.
America take back your Constitution and Bill Of Rights! Both Obama and McCain will continue to lead America into a HOLE of DEBT, DEPENDENCE and DISPAIR.
www.constitutionparty.org
www.baldwin08.com
WRITE IN CHUCK BALDWIN on your BALLOT

[oneworldusa]

Start pumping a lot of money in your 401k plans and stocks and mutual funds. Do it monthly. This is called dollar cost averaging. Buy low, sell high.

A weak stock market is the perfect time for regular joes to get in and buy stocks cheaply. JMHO.

[homespunlady]

We''ve Been here before. Take your pick - the Great Depression, Keating 5 and the S&L collapse or any of the other BUBBLE BASED CON GAMES that those that think up these PONZI SCHEMES and then PROFIT and RUN before total collapse create.

Ran across a DIFFERENT perspective and I''m left wondering if something similar might be part of what''s behind THIS collapse (again):

http://www.thirdworldtraveler.com/CIA/S&L_Scandal_CIA.html

[martel_v]

If Schumer had NOT written the letter regarding IndyMac while being aware of the situation as it obviously existed prior to writing the letter, he would be a prime candidate for an indictment, IMO.

The ''talking points'' BS is idiotic. In fact, people like John Reich (at the Office of Thrift Non-Supervision) should be indicted NOW for ''fiddling while Rome burns''. I''ve had enough of these administrative incompetents pointing fingers at everyone but themselves for their own lack of interest in doing the jobs for which they''re wildly overcompensated.

All of us in this country - except those whose incomes put them in the top tenth of the top one percent - are being crushed by the lazy, worthless scum at the top, and the hits just keep on coming. It''s just about time to build some guillotines and have a good housecleaning.

[smirk5]

SEN. McCAIN: No. No. I-the fact is that I''m different but the fact is that I have agreed with President Bush far more than I have disagreed. And on the transcendent issues, the most important issues of our day, I''ve been totally in agreement and support of President Bush.

[smirk5]

If Reagan/Bushonomics worked, then right now, we''d have seen more growth under the Bush Jr. Admin. than we saw under Clinton. But, Reagan/Bushonomics doesn''t work and the evidence is all around us right now.

[whitemale08]

It doesn''t matter what Schumer did, all chartered banks must go into receivership and bankruptcy protection.

This will stop the take over of our now dead economy by vulture hedge funds like Boones Pickens.

Then a new gobal reserve currency based on some precious commodity and must be decided upon by the world''s powerfull nation.

Then hedge funds must be taxed out of existence and Congress must assume it''s sole authority to credit and currency for investment in alternative energies and infrastructure.

It''s the only way.
Then Congress

[sparks224]

RingADing3,
Schumer is not to blame. Check this out.
http://www.groupnewsblog.net/2008/07/schumer-not-to-blame-for-indymac.html

[ringading3]

Thank You Senator Charles Schumer for the RUN on IndyMac!