Wall Street tumbles after a plan to rescue Bear Stearns
Updated: 2008-03-15 10:48
NEW YORK -- Wall Street tumbled but off the worst level Friday, as investors worried that a plan to ease a liquidity crisis at Bear Stearns indicates severe credit troubles.
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JPMorgan Chase & Co. and the New York Federal Reserve announced Friday a plan to provide secured funding to Bear Stearns for an initial period of 28 days. The move offers Bear Stearns relief from a sudden liquidity crunch, but investors worried that whether other banks might soon face similar liquidity stresses.
There was a market hearsay saying Bear Stearns faced liquidity problems, which was denied by the company. However, Bear Stearns said Friday the company's liquidity deteriorated in past day. The mar ket's concerns about the company have been proven true.
Bear Stearns shares fell sharply and dragging down other financial companies.
The plan overshadowed a US Labor Department report showing the consumer price index held flat in February, while analysts had expected for a 0.2 percent increase.
The Dow Jones industrial average fell 170.39 to 11972.42. Broader stock indicators also dropped sharply. The Standard & Poor's 500 index fell 24.09 to 1,291.39, and the Nasdaq composite index declined 42.56 to 2,221.05.
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