Financial sector troubles drive down stocks
NEW YORK – Wall Street plunged again Friday amid renewed fears that the financial sector’s troubles with bad credit won’t soon end and that some consumers are buckling under the weight of a slowing economy. The major indexes each lost more than 1 percent, including the Dow Jones industrials, which finished down nearly 250 points.
The arrival of quarterly earnings reports has investors worried about how banks and brokerages have fared after suffering losses in the collapse of the subprime mortgage market. Traders appeared to grow more pessimistic ahead of reports due next week from the nation’s biggest financial institutions. Merrill Lynch & Co., Citigroup Inc. and JPMorgan Chase & Co. are slated to weigh in next week.
Adding to investors’ unease, Merrill Lynch might take a $15 billion hit from its exposure to soured subprime mortgage investments, according to the New York Times. The nation’s largest brokerage is also said to be seeking another capital infusion to help shore up its balance sheet.
Investors also grew nervous after American Express Corp. warned that slower spending and more delinquencies on credit card payments will hamper profit throughout 2008. A profit warning from Tiffany & Co. added to Wall Street’s unease.
Friday’s session revealed the extent of misgivings about Wall Street’s efforts to sew up its troubles. Bank of America Corp. agreed to buy Countrywide Financial Corp. for $4.1 billion, which rescues the country’s largest mortgage lender but pays less than the company’s market value.
Japan’s Nikkei stock average closed down 1.93 percent. Britain’s FTSE 100 closed down 0.33 percent, Germany’s DAX index rose 0.06 percent and France’s CAC-40 fell 0.54.