Market drops as Bear Stearns sold for $2/share
|
|
|
By Jennifer CooganNEW YORK (Reuters) - Stocks fell on Monday after JPMorgan Chase bought Bear Stearns at a fire sale price and the Federal Reserve provided emergency cash to Wall Street as the global credit crisis worsened.JPMorgan is buying Bear Stearns for $236 million, or $2 per share -- one-fifteenth of the price at Friday's close. Shares of Bear, the fifth-largest U.S. investment bank, reached a high of $172.61 last year.Financial shares tumbled, with Bear down nearly 90 percent and Lehman Brothers down more than 22 percent at $30.30 on the NYSE. One exception was JPMorgan stock, up 9.1 percent to $39.86 on the NYSE, which helped stem declines on the Dow.The Fed made an emergency quarter-percentage-point cut to its discount rate to 3.25 percent on Sunday and expanded lending to a wider range of big financial firms, in the first such move since the Great Depression of nearly 80 years ago."This is going to get worse the longer the market prolongs the inevitable," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. "With all these discount rate cuts, it seems like the Fed is running out of silver bullets. Maybe they have to come up with something bigger."The Dow Jones industrial average <.DJI> fell 58.62 points, or 0.49 percent, to 11,892.47. The Standard & Poor's 500 Index dropped 14.84 points, or 1.15 percent, to 1,273.30. The Nasdaq Composite Index <.IXIC> slid 26.50 points, or 1.20 percent, to 2,185.99.In a fresh sign of faltering confidence in the U.S. economy and financial system, the dollar sank to its weakest against the yen since 1995 and slumped against the euro .The "fire sale" of Bear has put U.S. banks at risk as it will result in valuation adjustments that could see share prices fall as much as 50 percent, Oppenheimer & Co analyst Meredith Whitney wrote.Elsewhere in the financial sector, mortgage insurer PMI Group Inc reported its biggest ever quarterly loss, mainly due to losses on its investment in bond insurer FGIC Corp. It also slashed its dividend by more than 70 percent.Shares of PMI dropped 10.9 percent to $5.07.The New York Federal Reserve Bank reported an unexpectedly steep drop in its manufacturing survey and a rise in prices paid. It was the worst reading of business conditions in the state of New York since the index was launched in July 2001.(Editing by James Dalgleish)
(c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
|
|
|
|
|
|
Related News
Five more US bank failures bring total for 2009 to 120
New York - Bank failures in the United States have risen to 120 this year as five more regional institutions were added to the list, the US agency that guarantees the safety of bank deposits said. United Commercial Bank in San Francisco with assets o...
US stocks climb slightly despite double-digit jobless rate
New York - US stocks posted mild gains Friday to end the week as investors shrugged off government figures that put the unemployment rate above 10 per cent. The Labour Department said the jobless rate hit 10.2 per cent in the month of October, the hi...
US joblessness hits 10.2 per cent, highest in 26 years - Summary
Washington - The US unemployment rate surged to 10.2 per cent in October, the highest in 26 years as another 190,000 people lost their jobs, the Labour Department reported Friday. The figure comes after a 9.8-per-cent jobless rate in September and wa...
US joblessness jumps to 10.2 per cent, highest since 1983 - Update
Washington - The US unemployment rate surged to 10.2 per cent in October, the highest in 26 years, as another 190,000 people lost their jobs during the month, the US reported Friday. The figure reported by US Labour Department came after the 9.8 per ...
US jobless rate jumps to 10.2 per cent
Washington - The US unemployment rate surged to 10.2 per cent in October as another 190,000 people lost their jobs, according to US Labour Department figures released Friday. The jobless rate stood at 9.8 per cent in September. Unemployment had been ...
Bulls stop James, edge Cavs - Summary
Los Angeles - The King couldn't deliver in the clutch. Luol Deng and Joakim Noah combined to deny LeBron James a potential game-winning drive in the final seconds as and the visiting Chicago Bulls snapped the Cleveland Cavaliers' three-game winning...
Mortgage lender Fannie Mae posts nearly 19-billion-dollar loss
Washington - US mortgage lender Fannie Mae said Thursday that it would seek 15 billion dollars in federal aid, after posting its ninth consecutive quarterly loss. Fannie Mae reported a net loss of 18.9 billion dollars in the third quarter of 2009, co...
|
|
|
|
|
|
|
|
