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While you were sleeping: BusinessWire overnight wrap

Wednesday 13th August 2008

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Renewed concern about the credit crisis led Wall Street lower on Tuesday, with the decline tempered by another slide in the price of oil and hope that business spending might rebound.

The Dow Jones industrial average fell 139.88 points, or 1.19%, to 11,642.47, while the Standard & Poor's 500 Index slid 15.73 points, or 1.21%, to 1,289.59. The Nasdaq Composite Index dropped 9.34 points, or 0.38%, to 2,430.61

Credit worries ratcheted higher after Swiss bank UBS posted another $5 billion in write-downs and JPMorgan Chase & Co, the No 3 US bank, said it had $1.5 billion in losses so far this quarter.

Not even Goldman Sachs was immune. Three analysts downgraded their outlook on the biggest US securities firm, citing continued pressure on the financial markets.

Benchmark indexes extended losses after Freddie Mac said it would stop buying sub-prime loans issued in New York state and the Dallas Morning News reported that Dallas Federal Reserve Bank president Richard Fisher said the current financial turmoil was worse than the savings and loan crisis of the late 1980s and early 1990s.

More Pain

Billionaire investor Michael Price was betting on further declines at Citigroup because the bank had ``more pain coming,'' he said in an interview on Monday. Price runs New York- based MFP Investors LLC and was chairman and chief executive officer of Franklin Mutual Advisers LLC in Short Hills, New Jersey.

It wasn't just financials that fell. McDonald's fell after being cut to neutral from buy by analysts at UBS AG, who said the company might not be able to maintain its valuation as US job losses increase and economic growth slows in Europe.

Macy's, Kohl's, Nordstrom and JC Penney are scheduled to report second-quarter results this week.

Another decline in the price of oil helped cushion the market's fall, leading the Nasdaq briefly into positive territory earlier in the session. US crude oil for September delivery fell $1.44 to settle at $113.01 a barrel on the New York Mercantile Exchange on concerns about a slowing economy and a drop in demand.

As shares fell, the safe-haven lure of bonds increased.

The benchmark 10-year Treasury note jumped 21/32 in price to 100-22/32. Its yield, which moves inversely to its price, fell to 3.92% from 4% on Monday. Two-year Treasuries' price rose 7/32 to yield 2.45%, down from 2.56% late on Monday.

On the currency markets, the US dollar ended its five-day surge against the euro. The dollar traded at $1.4921 at 4:05pm in New York, compared with $1.4909 yesterday. It touched $1.4816, the strongest since February 26.

The yen rose against the Australian dollar and the pound. The yen strengthened as much as 1.8% to the four-month high of 95.57 per Australian dollar and 1.3% to 207.58 against the pound as investors reduced carry trades.

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