Market Features
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TSC Staff
03/14/08 - 07:24 PM EDT
The stock market took it on the chin Friday on news that Bear Stearns(BSC Quote - Cramer on BSC - Stock Picks) needed a Fed-backed credit facility from JPMorgan Chase(JPM Quote - Cramer on JPM - Stock Picks).
That undermined investors' confidence in the stock market; shares in New York tumbled as traders fretted that a funding crisis at Bear Stearns could mean more trouble is yet to come for the financial sector.
The Dow Jones Industrial Average slumped 194.65 points, or 1.6%, to 11,951.09, and the S&P 500 dropped 27.34 points, or 2.1%, to 1288.14. The Nasdaq Composite sank 51.12 points, or 2.3%, to 2212.49.
The declines ensured the erasure of all of the gains from a massive rally Tuesday, when the Federal Reserve's plan to inject $200 billion worth of liquidity into the market sent the Dow up more than 400 points. For the week, the Dow lost 2.6%, and the S&P sank 0.4%, though the Nasdaq managed to roughly break even.
The story of the day Friday was Bear Stearns, whose shares lost nearly half their value after Alan Schwartz, president and chief executive of the brokerage, said Bear's "liquidity position in the last 24 hours had significantly deteriorated."
That prompted the company to get emergency funding from JPMorgan Chase (JPM Quote - Cramer on JPM - Stock Picks) that will be backed by the New York Federal Reserve bank. The move comes just days after Schwartz said Bear had ample liquidity.
Bear Stearns' stock plummeted 47.4% to $30, as more than 186 million shares changed hands.
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