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Oct 3, 2008 1:19 pm US/Pacific
Stocks End Lower Amid Worries After House OKs Plan
NEW YORK (AP) ―
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NYSE signs top trading posts on the floor of the New York Stock Exchange in New York on Sept. 17, 2007.
AP
Stocks ended a volatile week with another sell-off Friday while
credit markets remained strained after enthusiasm over the government's
$700 billion financial rescue plan gave way to worries about obstacles
still facing the economy.
Investors dumped stocks late in the session after a big intraday
rally, repeating a defensive move seen throughout the yearlong market
pullback. As lawmakers voted on the plan, which President Bush quickly
signed into law, the Dow advanced more than 300 points. After it
passed, the blue chips moved in and out of positive territory before
ending down more than 150 points.
Investors had been anxious for resolution on the government's plan
to buy up bad assets from banks and other institutions to shore up the
financial industry and help resuscitate credit markets. Trading across
markets was volatile throughout the week as investors tried to
determine whether the plan would win approval and what effect it might
have. On Monday, the House's rejection took Wall Street and Capitol
Hill by surprise and handed stocks their biggest losses in years.
The Senate subsequently passed a sweetened version of the plan that
added tax breaks and raised the limit on federal deposit insurance from
$100,000 to $250,000.
"We're three weeks into a severe credit crunch and it's causing
untold economic damage to the country," said Hank Smith, chief
investment officer at Haverford Investments. He said while the bill's
passage will help Wall Street, the broader effects of the paralysis in
the credit markets has yet to emerge.
"It's fairly reasonable to assume that this should help unfreeze the
credit markets but what we don't know what's happened so far. How much
of a dent has it put into the economy?"
The credit markets indicated increased demand for safety. The yield
on the 3-month Treasury bill, the safest type of investment, fell to
0.49 percent from 0.70 percent late Thursday. Yields have remained low
in recent weeks because investors are eager to safeguard their money.
The yield on the benchmark 10-year Treasury note, which moves
opposite its price, rose to 3.61 percent from 3.64 percent late
Thursday.
According to preliminary calculations, the Dow fell 157.47, or 1.50 percent, to 10,325.38 after rising more than 310 points.
Broader stock indicators also ended lower. The Standard & Poor's
500 index fell 15.05, or 1.35 percent, to 1,099.23, and the Nasdaq
composite index fell 29.33, or 1.48 percent, to 1,947.39.
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