Standard and Poor's Tumbles Into Bear Territory
RENEE MONTAGNE, host:
And on Wall Street this morning, shares in Freddie Mac and Fannie Mae continued their plunge because of fears over the financial state of those government backed mortgage agencies. Today's volatile trading follows a rough day yesterday when all the major stock indices lost more than 2 percent of their value. NPR's Jim Zarroli has more.
JIM ZARROLI: For weeks, high energy prices and tight credit conditions have been eating away at investor morale and yesterday saw more of the same. Shares of Merrill Lynch fell 9 percent after a rating agency warned it may have to write down more debt, and financial stocks fell across the board. Then Cisco Systems said the economy may not turn around until next year. Hugh Johnson, chairman of Johnson Illington Advisors, says Cisco is an important bellwether stock for the market.
Mr. HUGH JOHNSON (Chairman, Johnson Illington Advisors): When they say or seem to imply that things are not getting better for the economy, not getting better for spending on technology, very demoralizing to the technology sector and very demoralizing, quite frankly, to the whole economy.
ZARROLI: By the end of the day, all of the major stock averages were down more than 2 percent. The S&P 500 has now lost more than 20 percent of its value since last October, which is considered a bear market. And Johnson says that may have had an effect on investors.
Mr. JOHNSON: Sometimes when you cross that 20 percent hurdle, everybody - or some investors throw the towel in and start to sell.
ZARROLI: Meanwhile, shares of the big federally sponsored mortgage companies, Fannie Mae and Freddy Mac, lost ground again. Analysts had been warning that the companies face big problems and may need to find ways to raise more money.
Jim Zarroli, NPR News, New York.
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