Wall Street tumbles on renewed credit jitters
(Herald Tribune) -- Credit jitters swept Wall Street again on Wednesday and pushed a key market index back into bear territory as financial shares fell and the appeal of government debt took a shine.
Oil pulled out of a steep two-day slide to end little changed after a U.S. government report showed a big drawdown in nationwide crude inventories and after Iran, a member of OPEC, conducted missile tests in a move that raised tensions with the West.
Iran's testing of long- and medium-range missiles, including one that could reach Israel and U.S. bases in the Middle East, led the dollar to retreat and bolstered haven currencies such as the Swiss franc.
The Dow Jones industrial average closed down 237.26 points, or 2.08 percent, at 11,146.95. The Standard & Poor's 500 index fell 29.03 points, or 2.28 percent, at 1,244.67. The Nasdaq composite index dropped 59.55 points, or 2.60 percent, at 2,234.89.
The broad market S&P 500 index fell into a bear market at day's end, territory defined as a 20 percent decline from a recent peak.
Banking shares tumbled and some investors worried that Fannie Mae and Freddie Mac might need a substantial capital injection, sending shares of the two major U.S. mortgage finance sources sharply lower.
The KBW banking index fell 5.7 percent, while Freddie Mac shares dropped almost 24 percent and Fannie Mae's fell about 13 percent.
"The financials are not recovering. Some of the regional banks are showing signs of weakness and starting to crack a little bit," said Seth Plunkett, a portfolio manager for fixed income with American Century Investments in Mountain View, California.
"Over all, we are seeing somewhat of a flight to quality and strength in Treasuries," he said.
"There's still a lot of uncertainty out there, so it's going to be hard for the market to make any real progress," said Alan Lancz, president of Alan B. Lancz & Associates, an investment advisory firm in Toledo, Ohio.
"Real estate prices are going down, and the earnings power that financial stocks had is going to be gone forever."
Oil pulled out of a steep two-day slide to end little changed after a U.S. government report showed a big drawdown in nationwide crude inventories and after Iran, a member of OPEC, conducted missile tests in a move that raised tensions with the West.
Iran's testing of long- and medium-range missiles, including one that could reach Israel and U.S. bases in the Middle East, led the dollar to retreat and bolstered haven currencies such as the Swiss franc.
The Dow Jones industrial average closed down 237.26 points, or 2.08 percent, at 11,146.95. The Standard & Poor's 500 index fell 29.03 points, or 2.28 percent, at 1,244.67. The Nasdaq composite index dropped 59.55 points, or 2.60 percent, at 2,234.89.
The broad market S&P 500 index fell into a bear market at day's end, territory defined as a 20 percent decline from a recent peak.
Banking shares tumbled and some investors worried that Fannie Mae and Freddie Mac might need a substantial capital injection, sending shares of the two major U.S. mortgage finance sources sharply lower.
The KBW banking index fell 5.7 percent, while Freddie Mac shares dropped almost 24 percent and Fannie Mae's fell about 13 percent.
"The financials are not recovering. Some of the regional banks are showing signs of weakness and starting to crack a little bit," said Seth Plunkett, a portfolio manager for fixed income with American Century Investments in Mountain View, California.
"Over all, we are seeing somewhat of a flight to quality and strength in Treasuries," he said.
"There's still a lot of uncertainty out there, so it's going to be hard for the market to make any real progress," said Alan Lancz, president of Alan B. Lancz & Associates, an investment advisory firm in Toledo, Ohio.
"Real estate prices are going down, and the earnings power that financial stocks had is going to be gone forever."
