Stocks Boom as Crude Oil Falls
08/08/08 - 04:41 PM EDT
TSC Staff
Updated from 12:45 p.m. EDT
Stocks in New York ripped higher Friday as the optimism surrounding another drop in oil prices helped offset a big loss and dividend cut at government-sponsored mortgage packager Fannie Mae (FNM Quote - Cramer on FNM - Stock Picks). The Dow Jones Industrial Average jumped 302.89 points, or 2.7%, to 11,734.32, and the S&P 500 surged 30.25 points, or 2.4%, to 1296.31. The Nasdaq was better by 58.37 points, or 2.5%, at 2414.10. The latest pullback in oil prices provided support for equity buyers. Near-term crude futures sank $4.82, or 4%, to settle at $115.20. Oil is now more than $30 below the all-time high it hit less than a month ago. The rally erased all of the losses from the prior session, when the Dow lost 224.64 points, or 1.9%, to 11,431.43, and the S&P 500 fell 23.13 points, or 1.8%, to 1266.06. The Nasdaq gave back 22.64 points, or almost 1%, at 2355.73. When the new day arrived, traders were initially upbeat, sending stock futures higher, but Fannie Mae's results reversed some of the momentum temporarily. The company lost $2.3 billion in the second quarter, and like fellow home financer Freddie Mac (FRE Quote - Cramer on FRE - Stock Picks), slashed its dividend payout in order to preserve capital. On a per-share basis, Fannie Mae lost $2.54 a share, more than triple what analysts expected. The dividend payment was taken all the way down to 5 cents a share from 35 cents in the previous quarter. Shares of Fannie Mae lost 9%. However, the buyers returned after their initial reluctance, and the stock market remained on an upward path throughout the day.
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