U.S. equities fell today amid fears financial institutions have rising exposure to bad credit and that the stability of Federal Home Loan Bank might be threatened.
The Dow Jones industrial average closed down 237.44, or 1.83%, at 12,743.44; the S&P 500 fell 33.49, or 2.32%, ending at 1,407.21; and the Nasdaq composite closed down 55.61, or 2.14%, at 2,540.99. All numbers are preliminary.
There is a concern about financial institutions having adequate liquidity and general credit problems beyond the subprime sector, said David Resler, managing director at Nomura Securities International in New York. Mr. Resler cited reports that Sen. Charles Schumer, D-N.Y., was concerned that heavy lending to troubled mortgage company Countrywide Financial Corp. may pose a risk to the safety and soundness of the FHLB system as a whole.
Earlier today, the Federal Reserve Bank of New York cited heightened pressures in money markets for funding, and said it will add funds to the banking system, starting with an $8 billion repurchase agreement, through the new year.