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Dow drops below 11,000 for 1st time in 2 years
(Agencies)
Updated: 2008-07-12 00:15 The troubles at Fannie Mae and Freddie Mac are just the latest depressing turn in a year-old credit crisis that shows no sign of ending, disappointing stock traders who just months ago who thought the worst was perhaps over. Global banks and brokerages have scrambled to sell assets and raise capital in an effort to offset nearly $300 billion of write-downs linked to the credit crisis. Citigroup Inc. announced Friday it will sell its German retail banking operation to France's Credit Mutuel for $7.7 billion. Meanwhile, oil continued its ascent on supply concerns. A barrel of oil vaulted to a record above $147, raising more concerns about the impact of higher prices on inflation and in turn, the overall economy. The confluence of negative news offset a mostly positive quarterly report from General Electric Co. The conglomerate that owns everything from television network NBC to jet engine plants reported second-quarter profits that met analysts' expectations. However, the outlook across its business lines was mixed. "You have two issues, crude popped back up $10 to $11 in the last few days, and that is causing some concern. The second point is the financial services sector, there is concern and speculation that Freddie, Fannie and Lehman won't be around on Monday. That's obviously causing worry," said Phil Orlando, chief equity market strategist at Federated Investors. In late morning trading, the Dow fell 215.84, or 1.92 percent, to 11,013.18 after having fallen to 10,980.37. It last traded below 11,000 on July 25, 2006. Broader stock indicators also lost ground. The Standard & Poor's 500 index fell 23.59, or 1.88 percent, to 1,229.80, and the Nasdaq composite index fell 38.15, or 1.69 percent, to 2,219.70. Light, sweet crude rose $5.08 to $146.73 per barrel on the New York Mercantile Exchange. Behind the rise are concerns about a disruption to tight global supplies amid tensions over Iran's launch of test missiles and the possible renewal of oil-related violence in Nigeria. |
