Stocks Down On Mortgage, Oil Woes

The Dow falls a little more than 1 percent on Friday. The main reasons for the decline are fears over the future of mortgage giants Fannie Mae and Freddie Mac, as well as oil prices, which touched $147 per barrel before retreating.

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MICHELE NORRIS, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

MELISSA BLOCK, host:

And I'm Melissa Block. It's been a tough day for the markets. President Bush and his treasury secretary did their best to calm fears about the plight of the huge mortgage companies Fannie Mae and Freddie Mac. Their stock prices have fallen dramatically. The message from the Bush administration was that a bailout wasn't necessary.

NORRIS: Late in the afternoon, though, came a story from Reuters saying the Federal Reserve was ready to allow both Fannie Mae and Freddie Mac to borrow the funds they need from the Fed. The Fed declined to comment on that report.

We go first to the stock market. It as a volatile day, even by recent standards. NPR's Jim Zarroli is going to tell us more about that. And Jim, how much did stock prices fall today, and where were the biggest losses?

JIM ZARROLI: Well, the Dow was down. It fell a little more than one percent. It had been down much more during the first part of the day. We saw the major stock indexes hit levels they haven't seen in two years. Really, almost every stock in the Dow is down.

It's a very jittery environment, a lot of rumors, a lot of panicky behavior. You really see - market sentiment seems to just change right away, but as often happens on volatile days, things got better by the end of the day.

NORRIS: You talk about that jittery environment. What are some of the main factors causing this decline?

ZARROLI: Well, Fannie Mae and Freddie Mac, the government's chartered mortgage-finance companies, had been losing ground all week. There was more of that today, questions about the role the government is going to play in rescuing them. And you saw them swing a lot.

At one point in the day, shares of Freddie Mac, I believe, were down below $4.00, which as one of the wire services pointed out, they were actually cheaper than the average gallon of gasoline.

NORRIS: Hmm. Beyond Fannie and Freddie, other factors contributing to this turmoil?

ZARROLI: Yeah, oil was again a factor. We're seeing a lot of concern right now about the political situation in Nigeria and the Middle East. We're seeing these missile tests by Iran. If anything ever happens to threaten the Iranian oil supply for whatever reason, it's going to be a really big deal.

There's also a strike getting underway by Brazilian oil workers. That's another factor. So in this kind of environment it doesn't take much to push oil prices up, and we saw that happen today. They actually hit $147 a barrel. They're closing in on 150, though they later fell back a bit, and that was a big reason why stocks fell.

NORRIS: I bet a lot of people are glad it's Friday. Thanks so much, Jim.

ZARROLI: You're welcome.

NORRIS: That was NPR's Jim Zarroli.

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