Stocks tumbled today after a plan to alleviate a liquidity crisis at Bear Stearns Cos. touched off concerns about the severity of credit...
NEW YORK — Stocks tumbled today after a plan to alleviate a liquidity crisis at Bear Stearns Cos. touched off concerns about the severity of credit troubles. Each of the major indexes lost more than 1.5 percent on the day.
The Dow Jones industrial average fell 194.65, or 1.6 percent, to 11,951.09. The Dow had been down as much as 313 points.
Microsoft, one of the 30 Dow stocks, fell 66 cents to close at $27.96. But Boeing, also a Dow stock, got a thumbs-up from an analyst and gained $2.05 to $76.23.
Broader stock indicators also declined but pulled off their lows. The Standard & Poor’s 500 index fell 27.34, or 2.1 percent, to 1,288.14, and the Nasdaq composite index fell 51.12, or 2.3 percent, to 2,212.49.
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The plan by the New York Federal Reserve and JP Morgan Chase offers Bear Stearns relief from a sudden liquidity crunch that analysts surmised could have felled the bond house. But the company’s position on the precipice of financial disaster left many investors shaken and spoiled some hopes that troubles in the moribund credit market are on the mend.
Stocks showed moderate increases in the early going after a Labor Department report showed the Consumer Price Index remained flat for February. Wall Street has been expecting inflation would show an increase. But the gains quickly disappeared after investors learned about the severity of troubles at Bear Stearns.
“This is another chapter in a book rather than a one-act play,” said Phil Orlando, chief equity market strategist at Federated Investors. He said the market is worried that further trouble in the credit markets will emerge and that the ramifications of the credit strains and a slowing economy could result in recession.
“Investors thought they are probably more the norm than the exception and maybe this is the tip of the iceberg,” he said, referring to Bear Stearns. “Our sense is that this is sort of an amoeba here and this is sort of a broadly spreading situation.”
For the week, the major indexes were mixed, with the Dow showing a modest gain, the Standard & Poor’s 500 index slipping and the Nasdaq composite index showing no change, finishing exactly where it did a week ago.