As Stocks Fall, Central Banks Pick Up the Pace
08/10/07 - 11:08 AM EDT
Liz Rappaport
The European Central bank lent 61.05 billion euros, or $83.6 billion, Bloomberg reports, and the Bank of Japan added 1 trillion yen overnight, or $8.5 billion. The Royal Bank of Australia lent $4.2 billion.
After its initial actions, the Fed did not inject additional money into the banking system during its normal operating period, typically around 9:40 a.m EDT, leading some observers to believe the Fed's "special operation of $19 billion announced earlier this morning has had early success in bringing the fed funds rate close to the Fed's 5.25% target," writes Tony Crescenzi, chief fixed-income strategist at Miller Tabak and a RealMoney.com contributor. But shortly before 11:00 a.m. EDT, the Fed returned to the markets and injected an additional $16 billion of liquidity. The Fed's actions come amid warnings from major lenders Countrywide Financial (CFC Quote - Cramer on CFC - Stock Picks) and Washington Mutual (WM Quote - Cramer on WM - Stock Picks), which separately expressed concerns about their ability to raise cash. As was the case with global stock proxies, major U.S. averages were sinking despite -- or perhaps because of -- the central bank's efforts. In recent trading, the Dow Jones Industrial Average was off 1.3%, the S&P 500 was lower by 1.6%, and the Nasdaq Composite was down 1.3%, hit by a more than 7% drop in shares of Nvidia (NVDA Quote - Cramer on NVDA - Stock Picks) despite its stronger-than-expected earnings report.
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