The stock markets went for a major plunge, but rebounded some in the late afternoon with the release of a Reuters report that Federal Reserve Chairman Ben Bernanke offered to open the central bank's discount window to battered mortgage lenders Fannie Mae and Freddie Mac. The Dow battled back from a morning 200-plus point deficit to finish down 128.48, or 1.1%, to 11,100.54 while the Nasdaq followed, falling off 18.77, or .83%, to 2,239.08 on Friday.
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Fannie [FNM] finished down $3.10, or 23.5%, to $10.10 while Freddie [FRE] closed down only 25 cents, or 3.1%, to $7.75. The market was responding to fears that the two largest buyers of mortgages in the U.S. may become insolvent based on reports that the government was preparing for a the possibility of a takeover.
Those reports were slightly eased when Bernanke reportedly offered the central bank's discount window as a temporary stop gap. However, after the markets closed, the Fed issued a statement that the reports were not true.
Meanwhile, U.S. Treasury Secretary Henry Paulson said in a statement in Washington: "Today our primary focus is supporting Fannie Mae and
Freddie Mac in their current form as they carry out their
important mission."
Friday's decline of Fannie and Freddie set the tone for a negative session for the markets and, specifically, the rest of the financials including Citigroup Inc., Wells Fargo & Co. and J.P. Morgan Chase & Co., which all tumbled as illustrated by the chart below.
On the M&A front, Anheuser Busch Cos. [BUD] spiked after reportedly receiving a higher bid of $70 from InBev SA, according to The Wall Street Journal. Anheuser is entertaining the offer, especially since minority stakeholder Warren Buffett favors a union with InBev, The New York Times reported. - Gerald Magpily
Troubled Wall Street
Closing share prices July 11, 2008 |
| Name |
Open |
Symbol |
Last price |
Change |
Mkt cap |
| J.P. Morgan Chase & Co. |
33.38 |
JPM |
33.16 |
-1.35 |
113627.1 |
| Lehman Brothers Inc. |
15.09 |
LEH |
14.43 |
-2.87 |
7975.46 |
| Merrill Lynch & Co. |
26.9 |
MER |
27.61 |
-1.1 |
27205.01 |
| Goldman Sachs Group Inc. |
166.35 |
GS |
162.48 |
-7.68 |
63985.41 |
| Morgan Stanley |
32.84 |
MS |
33.44 |
-0.07 |
37081.61 |
| Citigroup Inc. |
15.86 |
C |
16.19 |
-0.09 |
84994.8 |
| Fannie Mae |
7.16 |
FNM |
10.25 |
-2.95 |
9997.92 |
| Freddie Mac |
4.26 |
FRE |
7.75 |
-0.25 |
5012.1 |
| Bank of America Corp. |
21.31 |
BAC |
21.67 |
-0.69 |
96491.83 |
| Wachovia Corp. |
11.5 |
WB |
11.54 |
-1.59 |
24669.66 |
Source: TheDeal |
