Wall Street retreats, but avoids bloodbath

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The White House criticized the OPEC production cuts, but analysts said the move may not be enough to reverse the recent sharp drop in energy prices.

Slumping industrial production and consumer demand around the world are frustrating the hopes of oil and other commodity sellers to keep prices high. Futures for oil, gold, copper, lead, palm oil and a broad range of foodstuffs were all sharply down.

But the bad omens continued to outweigh the good, as markets struggled to avoid even larger sell-offs in the days to come.

U.S. automaker Chrysler said it will cut up to 5,000 administrative and temporary jobs by the end of the year through employee buyouts. “It’s likely that every facility Chrysler has around the world will be affected by these reductions,” company spokesman David Elshoff said.

Automakers like Toyota, Chrysler and General Motors have been hit particularly hard by the global credit crunch, which has fed fears of a deep recession and left even willing customers unable to get car loans.

In another ominous sign, the key global measure of credit was up Friday for the second straight day after nearly two weeks of decline. Massive bank bailouts plans in the United States, Europe and Asia have focused on trying to push down the London interbank interest rate — the rate banks charge each other for short-terms loans.

The spread on the inter-bank rate widened eight basis points to 262 basis points, according to the British Bankers Association.

The yields on three-month Treasury bills dropped to 0.86 percent, a sign that investors were seeking the safety of the government notes. The yield on the 30-year Treasury note fell to its lowest level in 30 years before rebounding late in the day.

Treasury Department officials said that the Bush administration may be making a second round of capital investments in about 20 more U.S. banks under a $250 billion plan to spur new lending as early as this weekend. Officials announced the first infusion of $125 billion to buy preferred stock in nine of the country’s largest banks last week.

In another negative milestone, Iceland Friday became the first Western European country to seek a support package from the International Monetary Fund, saying it is seeking $2 billion to stabilize the country’s battered finances. The Iceland government was forced to take control of the country’s three largest banks because of rising credit and asset problems.

About the Author
David R. Sands

David R. Sands

Raised in Northern Virginia, David R. Sands received an undergraduate degree from the University of Virginia and a master’s degree from the Fletcher School of Law and Diplomacy at Tufts University. He worked as a reporter for several Washington-area business publications before joining The Washington Times.

At The Times, Mr. Sands has covered numerous beats, including international trade, banking, politics ...

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