Stocks slip as anxiety tops optimism
NEW YORK - Stocks ended a mildly erratic day slightly lower yesterday after anxiety about widening credit problems offset investor optimism about a $2 billion capital infusion into troubled mortgage lender Countrywide Financial Corp.
NEW YORK - Stocks ended a mildly erratic day slightly lower yesterday after anxiety about widening credit problems offset investor optimism about a $2 billion capital infusion into troubled mortgage lender Countrywide Financial Corp.
The market gave up a moderate early gain, but fluctuations were to be expected given the amount of uncertainty about the credit markets, and the fact that stocks posted big gains Wednesday, pushing the Dow Jones industrial average up 145 points.
Bank of America Corp. announced late Wednesday that it would invest the money into the nation's largest mortgage lender to help it better weather problems with defaulting subprime loans. The investment was seen as a way not only to prop up Countrywide, but also to prevent any further losses at the mortgage lender from hurting the underlying economy.
The market showed little response yesterday to Federal Reserve policymakers' infusion of an additional $17.25 billion into the banking system to help boost liquidity, adding to the $41.25 billion the central bank has injected since the beginning of last week.
The Dow fell 0.25, or less than 0.01 percent, to 13,235.88.
Broader indexes fell modestly. The Standard & Poor's 500 index lost 1.57, or 0.11 percent, closing at 1,462.50, and the Nasdaq composite index fell 11.10, or 0.43 percent, to 2,541.70.
The Russell 2000 index of smaller companies fell 10.31, or 1.29 percent, to 788.25.
Crude oil rose 57 cents to settle at $69.83 a barrel on the New York Mercantile Exchange. Gold dipped slightly. The dollar was mixed against other major currencies.
Analysts say the markets are expected to be somewhat choppy until Wall Street gets a clearer picture about the Fed's intentions when it meets Sept. 18.
The Bank of America deal, which could ultimately give it a 16 percent stake in Countrywide, was viewed as a sign that U.S. financial companies are willing to step in. Last week, Countrywide borrowed about $12 billion from U.S. banks to keep it going.
Bank of America shares rose 18 cents to close at $51.83, while Countrywide rose 20 cents to close at $22.02, paring earlier gains.
Britain's FTSE 100 rose 0.01 percent, Germany's DAX index rose 0.15 percent, and France's CAC-40 rose 0.09 percent. Japan's Nikkei stock average closed up 2.61 percent, and Hong Kong's Hang Seng Index rose 2.77 percent.