Slumping Shares Brace Financial Jitters
US shares slumped as interest rate jitters increase. Fears about mortgage failures also hit the financial sector and the stock trading course. The situation offset the splash from the Blackstone Group’s debut on Wall Street.
The Dow Jones Industrial Average decreased 0.44 percent to 13,486.74 and the Nasdaq plummeted 0.38 percent to 2,606.90. The broad-market Standard & Poor’s 500 index dropped 0.45 percent to 1,515.39.
Mark Fightmaster at Schaeffer’s Investors Service said the market was under pressure as “the impact of subprime mortgages has crept back into the picture.” He said this was highlighted by reports that Wall Street investment firm Bear Stearns was taking out 3.2 billion dollars in loans to keep creditors from seizing assets of its money-losing hedge funds hit by mortgage sector losses. “In addition, some believe that the initial public offering (IPO) of private behemoth Blackstone Group could signal a market top,” Fightmaster noted.
Al Goldman, market strategist at AG Edwards, said he believes the subprime jitters have provided an excuse to sell but that the market needs to pause after the big run-up of the past few months. “We believe the subprime problems have been widely publicized and thus pretty well discounted,” he said.
