Bear Stearns sale pulls down US stocksMarch 18th, 2008 - 7:16 am ICT by admin
New York, March 18 (DPA) Only the Dow Jones index was in positive territory Monday after a dramatic weekend intervention by the US central bank in financial markets dragged down markets in Europe and Asia. The S&P 500 shed 11.54 points, or 0.9 percent, to 1,276.60. The NASDAQ lost 35.48 points, or 1.6 percent, to 2,177.01. The Dow Jones index of blue chips moved up 21.16 points or 0.18 percent, to 11,972.25.
The Federal Reserve Sunday approved a $2-a-share buyout of Bear Stearns by JPMorgan Chase, cut the lending rate to banks by a quarter of a percentage point and established a new lending facility to make short-term loans to investment banks.
The moves were part of a scramble to buoy an economy hit hard by defaults on home mortgages and a tightening credit market.
Bear Stearns’ credit crisis pushed down US stocks Friday on news that the company had received a financial bailout from JPMorgan Chase and the Federal Reserve.
The shockwaves from Monday’s fall-out forced sell-offs across the world, wiping out 51 billion pounds ($102 billion) from the value of Britain’s biggest companies alone. The Euro Stoxx 50 was down 3.0 percent at afternoon, while the FTSE 100 and the CAC 40 were down 2.5 percent.
In London the Bank of England’s injection of 5 billion pounds ($10 billion) into markets to calm the turmoil had little effect.
“There is the chance that other banks are going to suffer serious damage here,” Damon Barglow, of Eastern Investment Advisors in Boston, told Bloomberg Radio. “Clearly this is a crisis of historic proportions.”
The US currency fell against the euro to 63.58 euro cents from 63.81 euro cents Friday. The dollar fell against the Japanese currency to 97.47 yen from 99.15 yen - among the lowest levels in over 10 years.