NEW YORK, Oct. 27, 2008
Stocks Give Up Early Gains
Volatile Session Ends With Last-Minute 200-Point Loss For Dow
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Play CBS Video Video Credit Default Swaps Steve Kroft examines the complicated financial instruments known as credit default swaps and the central role they are playing in the unfolding economic crisis.
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The gyrations in U.S. stocks have been sizable since the market's peak a year ago. (AP Photo/Richard Drew)
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Timeline Financial Meltdown Track major events that lead to one of the most tumultuous times in Wall Street's history.
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Interactive Eye On The Economy In-depth features on U.S. markets, taxes, employment and the Federal Reserve.
The Street's back-and-forth was typical for a volatile market that has seen many recent rallies evaporate — particularly as hedge and mutual funds are forced to sell off even strong assets so they can meet investors' demands for their money back.
Alfred E. Goldman, chief market strategist at Wachovia Securities, said the market's late drop — which was particularly intense — after an earlier rally also reflects investors' ongoing uncertainty about the direction of the economy.
"We were trading higher earlier on very light volume, but the buyers just couldn't gather enough momentum to keep it going," he said. "When confidence is razor-thin, the nervous tension goes way up and bam, the sellers take over."
"It's just an overall malaise about how bad the economic slump is going to be globally," he said.
Banks got a boost earlier in the session after the Treasury said it signed agreements with nine financial institutions to buy stock in the companies this week. An upbeat home sales report also gave the market support until late afternoon.
The waffling in the market came amid light trading volumes ahead of possible interest rate moves from central banks — including the Federal Reserve, which is set to begin a two-day meeting Tuesday. The Fed is expected to lower its fed funds rate by a half-point to 1 percent on Wednesday. Investors are also optimistic that the European Central Bank is moving toward its own cut after President Jean-Claude Trichet said Monday such a step was "a possibility."
But while policymakers around the world have been trying to find a remedy for the fear of bad debt that has paralyzed parts of the credit markets in the past month, lending conditions have eased only slightly. Investors are worried that a drop-off in lending has damaged the economy.
The U.S. government is taking some of its first steps to steady the banking sector. The Treasury said it signed agreements with nine banks and will buy stock in the companies this week. The proceeds from the stock sales are intended to bolster the banks' balance sheets so they will begin more normal lending.
"Clearly, what's most important is that the funding crisis needs to be contained at this point," said Chris Orndorff, director of equity strategy at Payden & Rygel in Los Angeles. "The banks need to start taking on some more risks," he said. "I think it's going to take months."
According to preliminary calculations, the Dow fell 203.18, or 2.42 percent, to 8,175.77 after earlier rising 220 points.
Broader stock indicators showed even more sizable losses. The Standard & Poor's 500 index fell 27.85, or 3.18 percent, to 848.92, and the Nasdaq composite index fell 46.13, or 2.97 percent, to 1,505.90.
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Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
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See all 23 Commentswww.chilitoz.com is reporting that Sarah Palin has signed a deal with PlayBoy Magazine to posed partially exposed in a future release of the famous nudity magazine in exchange, Heffner will run a multi-million dollar anti Obama add a day before the election.
www.chilitoz.com is reporting that Sarah Palin has signed a deal with PlayBoy Magazine to posed partially exposed in a future release of the famous nudity magazine in exchange, Heffner will run a multi-million dollar anti Obama add a day before the election.
Posted by inventagod2 at 04:45 PM : Oct 27, 2008
We''re you saying that when the market hit 14,000?
It ALL happened on the BU$H WATCH...
Ha! HA! HA! Ha! HA! You poor republicans, Sarah Palin has sold her skins for some TV time.
www.chilitoz.com is reporting that Sarah Palin has signed a deal with PlayBoy Magazine to posed partially exposed in a future release of the famous nudity magazine in exchange, Heffner will run a multi-million dollar anti Obama add a day before the election.
Obama polls up, Wall street bets on dim future for American business !
Posted by standlee5 at 10:52 AM : Oct 27, 2008
Dumb Analogy...
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See all 23 Comments