Frigid temperatures this weekend prompt cold weather advisories

MPR News helps you turn down the noise and build shared understanding. Turn up your support for this public resource and keep trusted journalism accessible to all. 

Turn Up Your Support

Wall Street retreated Monday as Wall Street and
other global markets reacted to JPMorgan Chase & Co.'s
government-backed buyout of the stricken investment bank Bear
Stearns Cos.
      

On top of supporting the buyout, the Federal Reserve took the
extraordinary step of lowering the rate it charges to loan directly
to banks on Sunday night - two days before its scheduled meeting
Tuesday. The central bank lowered the discount rate by a quarter
point to 3.25 percent.
      

A buyout of Bear Stearns was certainly more appealing than the
alternative: letting the investment bank collapse and causing huge
losses for anyone linked to it. But the sale of Bear Stearns - and
the fact that JPMorgan is valuing the fifth-largest Wall Street
investment bank at a paltry $2.03 a share, or $240.1 million -
stirred fear among investors worldwide about other banks' exposure
to the troubled credit markets.
      

"That is just unbelievable," said investing consultant Scott
Fullman. Bear Stearns stock closed at $30 a share on Friday. "It
implies there is more risk in here than has been apparent."
      

After stocks dropped sharply in Asia and Europe, the Dow Jones
industrial average fell 70.02, or 0.59 percent, to 11,881.07.
JPMorgan is one of the Dow components.
      

Broader indexes also fell. Standard & Poor's 500 index futures
fell 16.31, or 1.27 percent, to 1,271.83, while the Nasdaq
composite index fell 30.95, or 1.40 percent, to 2,181.54.
      

Bear Stearns fell 89 percent to $3.61 - still above the buyout
price, implying that some shareholders believe the deal terms might
change. JPMorgan was up $3.20 at $39.74; the Fed essentially
guaranteed JPMorgan it would take responsibility for any risk the
bank was taking in buying Bear Stearns.
      

Bond prices rose as stocks fell. The yield on the benchmark
10-year Treasury note, which moves opposite its price, fell to 3.37
percent from 3.44 percent late Friday.
      

The dollar sank to a record low against the euro and hit a 12
1/2 year low against the yen, while gold prices surged to another
record high.
      

Light, sweet crude dropped $3.49 to $106.72 per barrel on the
New York Mercantile Exchange, after rising to nearly $112 a barrel
in premarket trading.
 

Gallery

Business and Economic News

The Dow Jones industrials fell about 150 points in the first few minutes of trading.

Wall Street retreats in wake of Bear Stearns buyout

Go Deeper.

Like this?