Market falls as Bear Stearns revives credit fears
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By Justin GrantNEW YORK (Reuters) - Stocks fell on Friday as concerns about the fallout from Bear Stearns' deteriorating cash position prompted investors to sell financial shares.All three major indexes briefly lost more than 2 percent after JPMorgan Chase & Co and the Federal Reserve Bank of New York agreed to provide emergency financing to Bear Stearns, the fifth-largest U.S. investment bank, for up to 28 days. Bear Stearns, whose stock dropped as much as 50 percent in morning trading, said the move would let it continue normal operations.The Standard & Poor's financial index <.GSPF> fell 2.5 percent, as investors feared there could be more trouble in the financial sector.Top drags included shares of Lehman Brothers Holdings , which fell nearly 9 percent; Citigroup Inc , down more than 4 percent, and JPMorgan Chase, which fell 2 percent."There's a lot of confusion ... a lot of uncertainty. It looked like the whole process of the subprime began with Bear Stearns and a couple of other hedge funds, and hopefully it ends with Bear Stearns," said Edward Craig , managing director and head of U.S. cash equities trading at Jefferies.The Dow Jones industrial average <.DJI> shed 147.19 points, or 1.21 percent, to 11,998.55. The Standard & Poor's 500 Index <.SPX> dropped 21.32 points, or 1.62 percent, to 1,294.16. The Nasdaq Composite Index <.IXIC> was off 36.71 points, or 1.62 percent, to 2,226.90.Bear Stearns said it will hold a conference call at 12:30 p.m. to address speculation in the marketplace related to its announcement this morning. Before the opening bell, Bear Stearns said its liquidity position had significantly deteriorated in the last 24 hours.Bear Stearns shares dropped 36.4 percent to $36.24, after falling as low as $28.42 earlier in the day on the liquidity revelation.Lehman Brothers shares fell 8.7 percent to $42.00, while Citigroup's stock dropped 3.7 percent to $20.29, and JPMorgan shares slid 2.2 percent to $37.28.After the news on Bear Stearns, U.S. interest-rate futures showed the market fully expects that the Fed will cut rates by 75 basis points at its rate-setting meeting on Tuesday.The credit concerns overshadowed earlier tame inflation data.The U.S. Labor Department said cheaper energy and transportation helped keep overall consumer prices in check in February, a surprise after a period of run-ups that had heightened concern over inflation. Analysts were skeptical, however, given record high prices of commodities from oil to gold.Fed Chairman Ben Bernanke will speak on "Fostering Sustainable Homeownership" at a conference in Washington at 1 p.m. EST.
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