Stock market losses widen on hedge-fund fears

NEW YORK – Last week’s stock-market slump continued today, led by financial services companies, as fears of hedge-fund losses continued to grow.
An early rally that lifted the Dow Jones Industrial Average as much as 129 points evaporated after a Merrill Lynch & Co. analyst said Bear Stearns Cos. – the nation’s second-largest underwriter of mortgage bonds – may be forced to rescue another hedge fund, Bloomberg News said. Bear Stearns shares lost $4.65 to close at $139.10, while shares in credit-rating pioneer Moody’s Corp. fell $2.25 to $61.12 in the company’s fourth straight decline.
Gainers exceeded losers by nearly three to one on the New York Stock Exchange, where 1.7 billion shares traded hands in trading 11 percent heavier than the three-month average. The Nasdaq Composite Index declined 11.88 points or 0.5 percent to close at 2,577.08, while the Standard & Poor’s 500 Index fell 4.82 points or 0.3 percent to 1,497.74 after rising as much as 0.8 percent during the day, and the Dow ended the day down 8.21 points or 0.1 percent at 13,352.05.
(The Dow and S&P ended last week down about 2 percent, while the Nasdaq Composite lost about 1.4 percent for the week. READ MORE)
“There’s definitely a fear that there’s multiple potential shoes still to drop in the hedge-fund world,” Michael James, senior equity trader at Wedbush Morgan Securities in Los Angeles, told Bloomberg News. His comments were echoed by Brian Barish, president of Denver- based Cambiar Investors, which manages $10 billion. “People are concerned that there’s some great, big unknowable out there,” Barish said. “There’s nothing the financial markets dislike more than uncertainty.”