Wall Street closes mixed on anxieties about economy

The market has been shaken by uncertainty surrounding bond insurers.

By
February 10, 2008 09:15
3 minute read.
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SHARES WALL STREET Stocks finished a dismal week with a mixed performance Friday as investors grappled with fears about insurers of distressed mortgage-backed bonds and anxiety about the broader economy. The Dow Jones industrial average, which rose in earlier trading, fell more than 60 points, while the Nasdaq composite index managed a gain. Both ended the week down more than 4 percent, however, and it was the Dow's worst week, percentage-wise, since March 2003. The market has been shaken in recent weeks by uncertainty surrounding bond insurers and whether they'll be able to handle huge losses in the value of mortgage-backed bonds. On Thursday, Moody's Investors Service lowered its rating on the bond insurer Security Capital Assurance Ltd. Then at midday Friday, Fitch Ratings, another credit rating agency, put a series of mortgage-backed securities insured by MBIA Inc. on negative watch. The Dow dropped 64.87, or 0.53%, to 12,182.13 - above its lows of the day, but well off its highs, too. The biggest losers among the 30 Dow companies were financial companies American Express Co. and JPMorgan Chase & Co. Broader stock indicators were mixed. The Standard & Poor's 500 index fell 5.62, or 0.42%, to 1,331.29, while the Nasdaq composite index rose 11.82, or 0.52%, to 2,304.85. The Dow ended the week down 561.06, or 4.40%, while the S&P 500 index lost 64.13, or 4.60%, and the Nasdaq fell 108.51, or 4.50%. The technology-heavy Nasdaq fared better than the other indexes Friday thanks partly to Amazon.com Inc., which authorized a $1 billion share buyback program. The on-line retailer rose $2.59, or 3.7%, to $73.50. EUROPE Share prices on the London Stock Exchange closed higher Friday. The FTSE-100 share index closed up 59.9 points, or 1.05%, at 5,784.00 ASIA Japanese stocks fell after government data showed a larger-than-expected drop in core machinery orders in December, darkening the outlook for Japan's capital investment. Many major Asian stock exchanges, including bourses in Hong Kong, mainland China and South Korea, were closed for Lunar New Year celebrations. Japan's benchmark Nikkei 225 stock index fell 1.4% to close at 13,017.20 on the Tokyo Stock Exchange. Japanese financial markets will be closed Monday for National Foundation Day. In Australia, the S&P/ASX 200 index rose 1.1% to 5,658 points. CURRENCY The dollar slipped slightly against the euro and the pound Friday, maintaining some of the gains that followed a pair of European interest-rate decisions. The euro was worth $1.4506 in late New York trading - up from $1.4459 in New York late Thursday, when it lost more than a US cent. The pound edged up to $1.9455 from $1.9405 on Thursday, when it shed nearly two cents. The two currencies had declined on Thursday after the Bank of England lowered its key interest rate by a quarter point to 5.25%, while the European Central Bank left its benchmark rate unchanged at 4% - but appeared to leave the door open for an eventual cut. The key rates of both European banks remain above the Federal Reserve's level of 3% - the result of US rate cuts totaling 1.25 percentage points in January. In other trading, the dollar dipped to 107.38 Japanese yen from 107.42 yen, and to 1.0009 Canadian dollars from 1.0117. The Canadian loonie gained against major currencies after government employment data showed Canada's jobless rate fell to 5.8% in January from 6% in December. The Canadian unemployment rate is at a 33-year low. COMMODITIES Wheat for March delivery surged the 30-cent daily limit to settle at $10.93 a bushel on the Chicago Board of Trade - the highest ever for that contract. Wheat also hit record-highs on Thursday and Wednesday. Wheat prices have surged to historic highs as bad weather has battered crop after crop around the globe, most recently in India and Canada. Foreign buyers scrambling to lock in supplies have increasingly turned to the US, which is exporting the grain at record pace. The US Department of Agriculture issued a bullish report Friday predicting US wheat inventories will total 272 million bushels by the end of May, the lowest in more than five decades and about 7% less than expected last month. Gold for April delivery jumped $12.30 to settle at $922.30 an ounce, and light, sweet crude for March delivery jumped $3.66 to settle at $91.77 a barrel on the Nymex. March heating oil futures jumped 9.56 cents to settle at $2.5541 a gallon, and March gasoline rose 8.94 cents to settle at $2.3572 a gallon.


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