- The Washington Times - Saturday, March 15, 2008

NEW YORK (AP) — Wall Street plunged anew yesterday after a near meltdown at Bear Stearns Cos. handed investors the unwelcome confirmation that the credit market’s troubles are far from over.

A wave of selling left each of the major indexes down more than 1.5 percent on the day; the Dow Jones Industrial Average fell nearly 200 points.

The plan by the New York Federal Reserve and JPMorgan Chase & Co. offers Bear Stearns relief from a sudden liquidity crunch that analysts surmised could have felled the investment bank. But the company’s position on the precipice of financial disaster left many investors shaken and spoiled some hopes that troubles in the moribund credit market are being worked out.

Stocks showed moderate increases in the early going after a Labor Department report showed the Consumer Price Index remained flat for February. Wall Street has been expecting inflation would show an increase. But the gains quickly disappeared after investors learned about the severity of troubles at Bear Stearns.

“This is another chapter in a book rather than a one-act play,” said Phil Orlando, chief equity market strategist at Federated Investors. He explained the market is worried that further trouble in the credit markets will emerge and that the ramifications of the credit strains and a slowing economy could result in recession.

The Dow fell 194.65, or 1.60 percent, to 11,951.09. The Dow had been down as much as 313 points.

Broader stock indicators also declined but pulled off of their lows. The Standard & Poor’s 500 Index fell 27.34, or 2.08 percent, to 1,288.14, and the Nasdaq Composite Index fell 51.12, or 2.26 percent, to 2,212.49.

For the week, the major indexes were mixed, with the Dow showing a modest gain, the Standard & Poor’s 500 Index slipping and the Nasdaq Composite Index showing no change, finishing exactly where it began.

The Russell 2000 Index of smaller companies fell 16.81, or 2.47 percent, to 662.90.

Bond prices jumped as stocks retreated. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.42 percent from 3.53 percent Thursday.

Elisa Parisi-Capone, economic analyst at RGE Monitor, contends the bond market has recently shown more concern about the economy.

“The stock market is increasingly catching up with signals from the bond market. Somehow the stock market could delude itself into thinking that they have nothing to do with the mortgage fallout,” she said.

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