Stocks on Wall Street Hammered Anew
10/10/08 - 11:54 AM EDT
Mike Taylor
Updated from 10:30 a.m. EDT
Stocks on Wall Street recovered from the worst of a massive early selloff Friday, but the major indices remained deep in the red as credit-crisis induced fears continued to weigh on investor sentiment. Trading was exceedingly choppy. The Dow Jones Industrial Average plummeted nearly 696 points early and briefly broke below the 8000 level, only to recover just as sharply and briefly touch positive territory. Lately, however, the index was trading down 463 points, or 5.4%, at 8117. The S&P 500 staged a similar comeback, though it was lately down 53 points, or 5.9%, at 857. The Nasdaq was 72 points lower, or 4.4%, at 1573. Financial stocks, at the forefront of investor skepticism thanks to nearly dry credit markets, experienced mixed trading in the highly volatile session. Battered financial firms Morgan Stanley (MS Quote - Cramer on MS - Stock Picks) and Goldman Sachs (GS Quote - Cramer on GS - Stock Picks) were again in focus. Ratings agency Moody's said it may cut Morgan Stanley's credit rating, and lowered its credit outlook for Goldman to negative. Following a heated battle with Citigroup (C Quote - Cramer on C - Stock Picks), Wells Fargo (WFC Quote - Cramer on WFC - Stock Picks) appeared set to buy Wachovia (WB Quote - Cramer on WB - Stock Picks) unencumbered. Citigroup said it will continue to pursue $60 billion in damages for breach of contract but would not try to overturn a merger between Wells Fargo and Wachovia. Citi had announced a Wachovia acquisition on Sept. 29, only to trumped days later by a new bid from Wells. The Journal also reported that insurance firm AIG (AIG Quote - Cramer on AIG - Stock Picks) took out an additional $9 billion in government loans, bringing its total borrowing from the U.S. in the past three weeks to $70.3 billion. The company continues to attempt to sell its assets in a struggle to stay afloat. Bank of America (BAC Quote - Cramer on BAC - Stock Picks) shares were edging higher following reports that it may sell a portion of its 11% stake in China Construction Bank. The banking titan also appeared set to carry out its acquisition of Merrill Lynch, despite declines in both firms' stock prices, according to a report in the Financial Times.
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