Wall Street Flounders

March 14, 2008

(Long Island, N.Y.) Wall Street experienced another downturn on early trading Friday as signs of how bad the credit industry has fallen off came evident after JP Morgan Chase & Co. and the New York Federal Reserve announced a plan to help troubling credit company Bear Stearns Cos.

Investors shied away from trading actively at the stock market after the announcement came from the New York feds. According to a released statement, both JP Morgan chase and NY Feds will provide Bear Stearns secured funding for an initial period of 28 days. A move aimed in giving the struggling credit company a relief from lousy liquidity figures while installing confidence for long term gains.

“The Bear Stearns news reversed the early positive sentiment from the inflation data,” said Peter Cardillo, chief market economist at Avalon Partners. “There had been nervousness about Bear Stearns for some time and now the market’s concerns about the company have been proven true.”

The Dow Jones Industrial lost 154.52 points by midmorning trading for a 1.27 percent decline to settle current point total at 11991.22 while Broader indexes Standard and Poor 500 and NASDAQ composites absorbed losses as well with S&P 500 giving up 20.15 points while NADAQ losing 30.61 points.

Initially, the stock market opened up on a high note today with a majority of the companies experiencing minimal gains after the Labor Department announced an unchanged consumer inflation figure for the month of February and a similar number of unemployed individuals in the US who claimed for unemployment benefits for the second straight week. All optimism where snuffed out of the market after the New York feds released their statement regarding Bear Stearns lifeline plan.

Also contributing for Wall Street’s woes was the US dollar’s decline against major currencies worldwide. The US dollar gave up a new record low at $1.5657 against the euros on Thursdays close. Chief foreign exchange strategist for CMC Markets in New York Ashraf Laidi said regarding World Central Banks plan of interference, “speculation that the world’s major central banks will mount coordinated intervention to stabilize the rout of the dollar. Considerable talk of possible coordinated intervention … is making the market somewhat jittery about putting on additional short dollar trades versus other major currencies”