Stocks drop Monday on credit concerns
EmptyNEW YORK -- Wall Street sold off sharply Monday as concerns about a weakening credit market wiped out investors' enthusiasm about strong retails sales over the holiday weekend. The Dow Jones industrial average fell nearly 240 points.
Investors were unnerved by another series of announcements that pointed to continuing problems in the credit markets that stem from home loan debt going bad under the weight of a faltering housing market.
Two banks had bad news: Citigroup Inc. warned it is looking to cut costs -- raising the possibility of further job cuts -- and HSBC Holdings PLC said it plans to bail out two funds it manages. To do so, Europe's largest bank plans to move about $45 billion of the fund's assets onto its balance sheet.
Meanwhile, The New York Federal Reserve, acknowledging "heightened pressures" in money markets that are expected to last through the rest of the year, said it plans to conduct a series of repurchase agreements aimed at boosting liquidity in the credit markets. The announcement from the New York Fed, which carries out monetary policy set by the U.S. Federal Reserve, essentially puts in writing many of the steps the Fed often takes at this time of year.
The Fed said it would inject $8 billion into the banking system on Wednesday. The amount of money is somewhat larger than in past years at this time.
According to preliminary calculations, the Dow fell 237.44, or 1.83%, to 12,743.44, closing near the lows of the session.
Broader stock indicators also gave up ground. The Standard & Poor's 500 index declined 33.49, or 2.32%, to 1,407.21, and the Nasdaq composite index fell 55.61, or 2.14%, to 2,540.99.