ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MICHELE NORRIS, host:
And I'm Michele Norris.
The sorry state of the nation's credit markets took its toll on the stock market again today. The Standard & Poor's 500 Index fell more than 2.9 percent. And every one of the 30 stocks on the Dow lost value. The drop occurred amid some more bad news about the mortgage industry.
And NPR's Jim Zarroli joins me now. So Jim, tell us more about this bad news in the mortgage sector.
JIM ZARROLI: Well, this was a really strange day in general because you had a report that came out from the government saying that productivity gains were really strong last month. It was the best performance in years. And that is normally the kind of thing that should make the markets happy but it was just completely overshadowed by all the bad news.
You had Washington Mutual, which is the largest savings bank, issuing a really depressing report about - of the housing market. You had New York Attorney General Andrew Cuomo who's been doing this investigation in the mortgage business, say he was looking into Fannie Mae and Freddie Mac. You had General Motors coming out with its worst earnings report ever, even though it was because of a one-time-only charge. That doesn't really matter when people are so nervous. So just, you know, really in terms of bad news, you could take your pick today.
NORRIS: So a steady drumbeat of bad news all around. How much ground has the stock market actually lost in recent weeks?
ZARROLI: Well, ever since this summer, we have just had these incredible swings in stocks basically because of the subprime mortgage crisis. A month ago -about a month ago, we were at a record high of 14,164. We've now come down about 850 points. Now that isn't - that much of a drop is historically. But, as I've said, what's important here is the volatility.
NORRIS: Now, Jim, we've seen reports lately that job growth and economic growth were fairly strong in recent months. So what accounts for the shaky stock market?
ZARROLI: Well, a couple of things. First of all, we've had oil prices climbing. That has played some part. They haven't reached the $100 a barrel yet, but that could happen any day. When you have oil prices going up, it's bad for growth, although there's some just screaming about, you know, when that impact begins to happen.
The real problem, though, is still the mortgage business. We've been here before. It's just a lot of bad mortgage debt out there. People are worried about how much money is going to be lost. Today, you had Moody's Investors Service saying it may downgrade $33 billion in debt from structured investment vehicles, or SIVs, which have been a source of real concern lately. And that's going to mean more losses for more people.
NORRIS: Now, there are some comments from a Chinese banking official about the strength of the dollar.
NORRIS: Did that also hurt stock prices?
ZARROLI: It seems to have made me somewhat - the Chinese government official said something to the effect that the U.S. is losing its status as a major global currency. He said China should try to keep some of its assets and other currencies. You know, the dollar has been losing value against some currencies. Now if China did that, it would send the dollar down a lot. It would be really bad.
But it's not clear how serious an idea this was. It doesn't seem to have been serious. China, after all, needs a strong dollar because it sells so much to us and also because it has lots of its currency reserves in dollars. So it's - it doesn't that they would ever really want to do something like that. And in fact, the official who said that has distanced himself from the remarks since then.
NORRIS: Thank you, Jim.
ZARROLI: You're welcome.
NORRIS: That was NPR's Jim Zarroli in New York.
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