With the election now over, focus will turn back to what ails the economy. And front and center will be the continuing housing crisis. Foreclosure rates keep going up and the $700 billion bailout has yet to spur lending.
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Analysts have been warning for some time that Washington Mutual (NYSE:WM) was on the brink of collapse.
Last night they were closed by the government and banking assets were sold to JPMorgan Chase & Co (NYSE:JPM) for $1.9 billion. Shares of Washington Mutual plunged $1.24 to 45 cents in after-hours trading.
A contact of mine recently commented that the demise of Bear Stearns marked the greatest buy signal in the world. “It’s all uphill from here, Buddy!” Why, I asked him, would one more corpse in a long string indicate a turning point for the stock market?
Optimism has turned to realism on Wall Street.
US stocks slumped today following disappointing quarterly earnings and news that mortage lender Washington Mutual needed a bigger cash injection than expected. WaMu today drew $7 billion in capital, $2 billion more that the amount originally circulated.
News that existing home sales dropped in February also weighed on investor sentiment.
US stocks are steaming ahead as Mr Market digests the news of a $5 billion injection for mortgage lender Washington Mutual.
Rising crude oil prices have also helped boost oil-sector stocks.
Dow Jones MarketWatch reports that the Dow Jones industrials were up 104 points to 12,713, with 24 of its 30 components moving higher, with financials leading the rise.