U.S. Stocks In Sharp Plunge On Bear Stearns Bailout
NEW YORK (MarketWatch) -- U.S. stocks on Friday shed opening gains as word of a possible rescue of Bear Stearns Cos. threw a wet blanket on earlier cheer that came with data showing consumer prices held steady in February.
"Initially, the financing moves were seen as a positive for the credit markets, though now, it appears the Fed has been required to step in in order to avoid the collapse of Bear," said analysts at Action Economics.
The Dow Jones Industrial Average fell 178.53 points to 11,967.21, with 29 of its 30 components trading lower.
Early blue-chip gainers included Exxon Mobil Corp. , up 0.2%, after its upgrade to outperform from neutral by Credit Suisse.
The S&P 500 fell 20.61 points to 1,294.87, while the Nasdaq Composite rose 33.40 points to 2,230.21.
Futures for the stock indexes traded lower ahead of the Labor Department report showing the consumer price index held flat in February, defying expectations for a 0.2% increase. .
Also ahead of the opening, Bear Stearns said its liquidity had "significantly deteriorated" during the past 24 hours, and J.P. Morgan Chase said it worked with the Federal Reserve Bank of New York in securing funding to the brokerage firm. .
There's more data ahead. At 10 a.m. Eastern, the University of Michigan's consumer confidence index is slated to be released.
On Thursday, U.S. stocks recovered from opening losses, and the Dow industrials ended up 35 points, the Nasdaq Composite advanced 19 points and the S&P 500 gained 6 points.
Crude-oil futures dropped to trade back below $110 a barrel, as the dollar rebounded against major currencies following the release of better-than-expected U.S. inflation data.
Crude oil for April delivery fell 58 cents to $109.75 a barrel on the New York Mercantile Exchange. .
Gold futures, having surged to a record above $1,000 an ounce in the previous session, edged higher Friday as traders awaited the release of U.S. inflation data.
Gold for April delivery gained $2 to stand at $995.80 an ounce on the New York Mercantile Exchange. .
Federal Reserve Chairman Ben Bernanke is scheduled to give a speech at 12:30 p.m. Eastern on "sustainable homeownership."
International stock markets were mixed, with mostly losses in Asia and rises in Europe.
By Kate Gibson