Stocks gyrate after Bear Stearns deal

Associated Press

Reader feedback
More stocks coverage
Latest AP headlines

NEW YORK -- Wall Street fell in temperamental trading Monday as investors grappled with news of JPMorgan Chase & Co. buying the stricken Bear Stearns & Co. in a deal backed by the government. The Dow Jones industrials, down nearly 200 points in the early going, fluctuated into positive territory and then pulled back again.

AP

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.

And some unprecedented moves by the Federal Reserve gave the market a bit of solace on what many predicted would be a day of precipitous losses in the stock market.

Besides supporting the buyout, the Fed lowered the rate it charges to loan directly to banks by a quarter-point on Sunday night - two days before its scheduled meeting Tuesday. The central bank also set up a lending option for firms, including many non-bank financial services firms, to secure short-term loans for a broad range of collateral.

"This removes the risk of further slides for these companies, the risk that a Bear Stearns incident would happen again," said Robert Pavlik, portfolio manager at Oaktree Asset Management.

Full story

MORE HEADLINES Wholesale prices rise 0.3% 7:56 AM CT ACS signs $25M contract 7:31 AM CT Fed expected to cut interest rates by up to 1 point today Southwest Airlines to suspend plans for outsourcing maintenance See all of today's headlines

TOMORROW We applaud those who do their own taxes, says The Motley Fool. It’s not unreasonable, though, to seek a professional to prepare your taxes. Learn how to find a good one in tomorrow's Business section.