Wall Street loses momentum as stocks fall

October 15th, 2008 - 7:03 am ICT by IANS  

Gordon BrownNew York, Oct 15 (DPA) Wall Street could not hold on to early gains Tuesday despite President George W. Bush’s announcement of a $250-billion cash infusion plan to prop up the nation’s struggling banks.Wall Street began the day with an early surge capitalizing off Monday’s massive rally, but The Dow Jones Industrial Average and the two other leading indices were down by the time the closing bell rang Tuesday afternoon.

The Dow Jones Industrial Average lost 76.62 points, or 0.82 per cent, to close at 9,310.99. The Standard & Poor’s 500 fell by 5.34 points, or 0.53 percent, to finish at 998.01. The technology-heavy Nasdaq Composite Index fell 65.24 points, or 3.54 percent, to 1,779.01.

The Dow, S&P and Nasdaq jumped by more than 11 percent on Monday, but the momentum did not last in a sign of turbulence that has swept across the market and eroded confidence in the economy even as Bush announced added emergency spending to prevent wider fallout.

The falloff Tuesday was well below last week’s record plunges that sparked more worldwide panic.

Bush said the $250 billion, part of a $700-billion rescue plan, would be used to buy ownership stakes in the banks in an effort to inject cash into the economy and restore credit.

“This new capital will help healthy banks continue making loans to businesses and consumers,” Bush said. “This is an essential short-term measure to ensure the viability of America’s banking system.”

The announcement followed coordinated moves by key European governments in recent days that included injections of unprecedented amounts of cash into their reeling banks.

“Nations around the world are working together to overcome this challenge, and with confidence and determination, we will return our economies to the path of growth and prosperity,” said Bush, who has closely coordinated his policies with those of his counterparts in Europe.

Bush spoke with French President Nicolas Sarkozy, German Chancellor Angela Merkel and British Prime Minister Gordon Brown earlier Tuesday, and plans to meet with Sarkozy Saturday at the presidential retreat Camp David.

On the currency markets, the dollar dropped against the Japanese yen to 101.88 yen from 102.02 yen Monday, and continued to fall against the euro, slipping from 73.68 euro cents Monday to 73.36 euro cents Tuesday.

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