Wall Street Fluctuates After World Markets Drop
U.S. stocks took a quick dive after the opening bell Friday, plummeting nearly 700 points soon after trading began, but then quickly recovering the deficit in early morning trading.
Meanwhile, coordinated interest rate cuts by the world’s central banks, aimed at helping credit markets and boosting consumer confidence, appeared to have little effect.
The Wall Street Journal reported that government officials are considering temporarily guaranteeing all U.S. bank deposits and billions of dollars in bank debt, along with possibly buying stakes in individual banks.
And according to The New York Times, officials also are mulling a British proposal that includes repayment guarantees for certain types of loans.
Although several financial plans were being reviewed, no announcement was likely to come before a meeting on Friday with finance ministers from seven of the largest industrial nations, officials told the Associated Press.
On Thursday, the Dow Jones industrial average dropped 679 points, or 7.3 percent. Asian markets followed suit, as key market gauges dropped 9.6 percent in Japan, 8 percent in India and 7.2 percent in Hong Kong.
European stocks slid by midday with key market barometers losing 7.3 percent in London, 7.7 percent in Germany and 7.5 percent in Paris, the AP reported.
Finance ministers from the United States, Germany, Japan, France, Britain, Italy and Canada were planning to meet Friday in Washington to discuss the financial firestorm.
President Bush vowed to take “strong action” against the crisis and emphasized “our common desire to work with our European friends to develop a best-as-possible common policy,” according to the Agence France-Presse.
In Tokyo, Japanese Premier Taro Aso, chairman of the Group of Eight nations, which includes the seven industrialized nations and Russia, said he would call an emergency G-8 summit if the meeting in Washington did not reach a deal on the global credit crisis, the AFP reported. The G-8 nations held their regular annual meeting in July.
Last week, the United States passed a law authorizing the U.S. Treasury to buy up to $700 billion worth of tainted mortgage-backed securities in an effort to address the financial turmoil.