Wall Street Cut by Credit Crunch
10/10/08 - 03:11 PM EDT
Mike Taylor
Updated from 1:56 p.m. EDT
Stocks on Wall Street partially resolved violent morning volatility by entrenching themselves deep on the downside Friday as credit crisis-induced fears continued to weigh on investor sentiment. Trading remained 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 435 points at 8145. The S&P 500 was lately down 54 points at 856. The Nasdaq was 81 points lower at 1564. Amid the increasing concern about banks, the U.S. government was considering guaranteeing bank debt and insuring all domestic bank deposits, according to a report in The Wall Street Journal. Friday afternoon, the finance ministers from the Group of Seven industrial nations held a meeting in Washington. The economic powers plan to discuss a coordinated response to the global credit crisis. Japan's finance minister, Shoichi Nakagawa, said that his country would propose an international fund to secure emergency loans for nations suffering under the credit squeeze. "Because this is a global banking crisis, you've got to come up with a global plan to backstop everyone," said Paul Mendelsohn, chief investment strategist at Windham Financial. "This is a real financial panic. The run on the money markets is the equivalent of a run on the bank." He said the U.S. Treasury should begin guaranteeing money market funds and is right to take equity positions in financial firms as opposed to buying bad debt.
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