U.S. stocks plummeted on Thursday, exhibiting Wall Streets sixth drop during the past seven trading sessions. Investors, worried about future credit loss from mortgage default notes and concerned with declining home prices, began to demonstrate a powerful aversion to risk. Investors, selling stock equity, began to purchase safer U.S. Government bonds; and as a result, money flow into the U.S. Treasury surged, sending bond yields to their lowest in more than two years.
Financial stocks took the brunt of the selling, retracing previous gains that were present during Tuesday’s rally. The worst decliners amongst the banks included Citigroup, Inc (C.N), whose stock dropped over 4 percent, and JPMorgan Chase & Co (JPM.N), whose stock also declined 4 percent.
Shares of home funding providers Fannie Mae (FNM.N) and Freddie Mac (FRE.N) also saw a similar loss. After Chief Executive of Wells Fargo & Co (WFC.N), John Stumpf, stated that the “U.S. Housing slump was far from over and was the worst since the Great Depression”, panic began to insue as investors tried to safeguard assets.
John O Brien, vice president of MKM Parnters, LLC, stated “There’s just too much fear in the financials. The fear is back again that the writedowns are kind of a mystery and no one really knows what the bottom is or what the outcome is going to be.”
The DJIA slid 120.96 points, or 0.91 percent, to finish at 13,110.05. The Standard & Poor’s 500 Index (.SPX) dropped 19.43 points, or 1.32 percent, to close at 1,451.15. The Nasdaq Composite Index (.IXIC) fell 25.81 points, or 0.98 percent, to 2,618.51.
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