US financial shares drop over bank failuresJuly 15th, 2008 - 9:05 am ICT by IANS
New York, July 15 (DPA) US stocks fell Monday, sending financial shares plummeting to their biggest drop in eight years, spurred by regional bank failures. US banking customers were left with many questions over the weekend after the assets of California-based US mortgage bank IndyMac were seized Friday by US federal regulators.
The Federal Deposit Insurance Corporation said last week that IndyMac’s failure was the largest US bank crash since the fall of the Continental Illinois National Bank in 1984. Observers are asking what is to follow the latest drama of the US credit crisis.
“The factors that affected IndyMac are not isolated; while they’re probably more severe, the pressures are evident in other financials,” Alan Gayle, a senior investment strategist at Ridgeworth Capital Management told Bloomberg financial news agency Monday.
Another factor contributing to the slump was the effort by the US Treasury announced Sunday to aid the troubled Fannie Mae and Freddie Mac. The two mortgage companies undergird the nation’s struggling home mortgage market, financing or buying half of all mortgages, which are estimated at $12 trillion in the US.
“It’s a fairly sad commentary that the government has to step in and take these actions,” said Liam Dalton, New York-based chief executive officer of Axiom Capital Management. “The overall market probably remains in a malaise, because the market is very respectful of the fundamental issues,” he told Bloomberg.
The blue-chip Dow Jones Industrial Average fell 45.35 points, or 0.41 percent, to 11,055.19. The broader Standard & Poor’s 500 Index fell 11.19 points, or 0.9 percent, to 1,228.30. The technology-heavy Nasdaq Composite Index fell 26.21 points, or 1.17 percent, to 2,212.87.
The dollar rose to 62.87 euro cents from 62.75 euro cents on Friday and fell to 106.17 Japanese yen from 106.27 Japanese yen.
Gold increased 13.1 dollars to 973.7 dollars per fine ounce.
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