Financial issues plunged Friday on a spate of negative mortgage
headlines. The Fed will be in a tricky position at next week’s meeting
Who said Summer is dead on Wall Street? Major U.S. stock indexes
started August with another wild week, capped by an honest-to-goodness
rout Friday. Once again, the main culprit behind the sell-off was
investor fears over the subprime-loan mess, and the degree to which
hobbled credit markets may hinder U.S. economic growth.
On Friday, the Dow Jones industrial average fell 281.42 points, or
2.09%, to 13,181.91. The broader S&P 500 index was off 39.14
points, or 2.66%, to 1,433.06. The tech-heavy Nasdaq Composite index
dropped 64.73 points, or 2.51%, to 2,528.89.
There was plenty of bad news to go around. A move by ratings agency
Standard & Poor’s to lower its credit outlook on Bear Stearns Cos. (BSC)
to negative also weighed on sentiment, as did a comment by the firm’s
CFO on a conference call with analysts that fixed-income market turmoil
is the worst in 22 years. Meanwhile, mortgage lender American Home
Mortgage (AHM) basically closed up shop amid financing difficulties.
Investors also weighed a disappointing report on job growth in July and
a decline in a service-sector sentiment gauge for the month, both of
which suggested the economy isn’t growing at the pace some people had
hoped.
Investment banking and homebuilding stocks were among the groups plunging on the credit-market fears.
Stocks Tumble amid Subprime Turmoil
::Tullycast:: 