Stocks tumbled today as the ailing credit market and a spike in home foreclosures intensified the market's worries about a sagging economy...
NEW YORK — Stocks tumbled today as the ailing credit market and a spike in home foreclosures intensified the market’s worries about a sagging economy.
The Dow Jones industrials fell 214.60 to 12,040.39 — almost slipping below the 12,000 level, which it briefly did in January for the first time since November 2006.
Microsoft, one of the 30 Dow stocks, sank 55 cents to close at $27.57 a share. Boeing, also a Dow stock, fell $1.20 to $79.51.
Broader indexes also retreated. The Standard & Poor’s 500 index fell 29.36, or 2.2 percent, to 1,304.34, and the Nasdaq composite declined 52.31, or 2.3 percent, to 2,220.50.
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Concerns about credit grew after Thornburg Mortgage and a Carlyle Group bond fund revealed troubles with investments backed by mortgages. The entities failed to make margin calls, which are payments to guarantee much larger debt or investments.
And the genesis of the credit concerns that erupted last year — souring mortgage loans — dealt investors another blow after the Mortgage Bankers Association reported that home foreclosures rose to record levels in the fourth quarter. Worries about defaults have made lenders hesitant to extend credit, preventing the credit markets from functioning normally.
Wall Street’s sense that credit troubles are seeping further into areas of the financial sector once deemed safe weighed on financial stocks and the broader market.
“I think these are near-term, unfortunate events that if they had the luxury of time and capital they could probably weather but unfortunately with this leverage-based system we have, time is a very expensive luxury,” Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said in reference to the difficulties at Thornburg and Carlyle.