- The Washington Times - Tuesday, July 15, 2008

NEW YORK (AP) | Wall Street extended its slump into yet another week Monday as investors worried that even a safety net set up for mortgage financiers Fannie Mae and Freddie Mac won’t head off further troubles in the financial markets.

Investors’ latest unease about the banking sector comes in a week when many financial names are to issue quarterly reports - many of which will likely include sizable write-downs of souring mortgage debt.

The Treasury and the Federal Reserve said Sunday they would aid Fannie Mae and Freddie Mac if needed. Wall Street has been on edge about the well-being of the government-chartered companies because they together hold or back $5.3 trillion of mortgage debt, about half the outstanding mortgages in the United States. Washington’s efforts to shore up confidence in Fannie Mae and Freddie Mac at times helped those shares Monday, but troubles arose in other corners of the financial sector.

Investors worried about a run on IndyMac Bancorp Inc. that led to the bank’s takeover by the government Friday. IndyMac is the largest regulated thrift to fail.

Trading in shares of regional bank National City Corp. was briefly halted as the company responded to rumors of financial troubles. The bank said in a statement it is experiencing “no unusual depositor or creditor activity” and that as of Friday’s close it had more than $12 billion of excess short-term liquidity.

The Dow Jones Industrial Average fell 45.35, or 0.41 percent, to 11,055.19 after spiking nearly 140 points in early trading.

Worries over Fannie Mae and Freddie Mac on Friday led to a volatile session in which the Dow dipped below the 11,000 mark for the first time in about two years before paring its losses; the market suffered its fourth straight losing week.

Broader stock indicators also dropped Monday. The Standard & Poor’s 500 Index fell 11.19, or 0.90 percent, to 1,228.30, and the Nasdaq Composite Index fell 26.21, or 1.17 percent, to 2,212.87.

Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where volume came to 5.29 billion shares, down from a very heavy 6.57 billion on Friday.

Bond prices jumped as investors sought the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.86 percent from 3.96 percent late Friday.

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