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Aug-09-2007 14:36printcomments

Dow Plunges 387 Points on Global Credit Fears

The S&P 500 was down 44.40 while the Nasdaq Composite fell 56.49.

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(NEW YORK) - The Dow Jones on Thursday suffered its second worst session of 2007, on worries about the global credit market sparked a broad selloff in stocks, following a three-session rally.

The Dow Jones industrial average was down 387.18, its biggest one-day point loss since Feb. 27th, when it plunged 416 points on worries about a global growth slowdown.

The Dow's decline Thursday equaled a loss of 2.8 percent.

The S&P 500 was down 44.40 while the Nasdaq Composite fell 56.49.

CNN reported fears about the subprime mortgage market and the credit crisis resurfaced Thursday after BNP Paribas, France's biggest bank, said it was halting withdrawals from three of its top funds because it can't value their assets in the current market.

Additionally, AIG, one of the world's largest insurance companies, warned Thursday morning that it is seeing mortgage delinquencies spreading from subprime to prime.

The company also reported higher-than-expected quarterly earnings late Wednesday.

AIG, down $2.18 to $64.30, lost 2.5 percent, recovering from a 5 percent plunge at the open.

The news sent stocks tanking, however, equities were already vulnerable to a decline, following a robust three-day market surge earlier this week, that followed a big selloff.

Seeking to calm credit worries, the European Central Bank added cash to money markets. However, the move seemed to have the opposite effect, adding to worries rather than easing them.

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Henry Ruark August 11, 2007 7:14 am (Pacific time)

To all: Read with horror sorry tale of special-interest protection given with YOUR tax dollars, as Fed "pours more liquidty" down the same speculative hole already draining whole world economy. Whatever happened to that "capitalistic principle" of allowing open market to make decisions ? Could it be that markets are not so damned "open" as we've been taught ?

Henry Ruark August 10, 2007 6:55 am (Pacific time)

To all: "Ask he who owns one" is among oldest of principles. This is world-leader in the basic business involved: "Trust was shaken today. Credit depends on trust. If trust disappears, then credit disappears, and you have a systemic issue." ---THOMAS MAYER, chief European economist at Deutsche Bank in Frankfurt, on yesterday’s market turmoil. Decade of deepening, always more desperate speculation is about to bring home inevitable desperate consequences.

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