Closing Market Report
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Stocks slide despite more cash in system
By Lauren Villagran / Associated Press
NEW YORK » Wall Street gave up a moderate gain in late trading and closed marginally lower yesterday after the Federal Reserve and other central banks added more cash to their banking systems, helping investors set aside some concerns about credit tightness.
The New York Fed, which carries out the central bank's market operation, minutes after the opening bell announced $2 billion in overnight repurchase agreements.
The Fed's "repo" follows a move by the Bank of Japan to put $5 billion into the markets and an addition by the European Central Bank of $65.3 billion; the ECB added more than $200 billion last week. The moves, following similar injections by the Fed last week, appeared to placate Wall Street for now and allowed it to focus on a week of fresh economic data. Since Thursday, the Fed has added $62 billion in liquidity.
Yesterday's injection, however, was smaller than normal, perhaps reassuring some investors that the central bank doesn't yet feel the need to pump more liquidity into the market. The last time the Fed repurchased as little as $2 billion in one day was April 18.
The central bank moves seem to be calming a market that has been torn by volatility for weeks. But Ryan Detrick, senior technical strategist for Schaeffer's Investment Research, said trading yesterday was tepid. In fact, yesterday's decline was a sign that investors remain nervous -- that the markets gave up their gains wasn't surprising given how volatile trading has been.
"We got off to a good start in the morning, but people are still kind of on edge here and are unwilling to jump in and do a lot of buying," he said. "There's so much worry out there about the next shoe to drop."
The Dow Jones industrial average fell 3.01, or 0.02 percent, to 13,236.53.
Broader stock indicators also rose. The Standard & Poor's 500 index fell 0.72, or 0.05 percent, to 1,452.92, and the Nasdaq composite index retreated 2.65, or 0.10 percent, to 2,542.24.
Bonds were little changed, with the yield on the 10-year Treasury note falling to 4.78 percent from 4.80 percent late Friday.
The Russell 2000 index of smaller companies slipped 8.97, or 1.59 percent, to 779.81.
Advancing issues was about even with decliners on the New York Stock Exchange, where consolidated volume came to 3.54 billion shares, compared to 5.11 billion on Friday.
The dollar was mixed against other major world currencies. Gold futures fluctuated, while oil futures rose. Light, sweet crude rose 13 cents to $71.60 per barrel on the New York Mercantile Exchange.
Goldman Sachs Group Inc. said yesterday its funds using quantitative strategies, or computer modeling, "are currently under pressure" after global markets sold off on worries about debt and credit. Goldman fell $3 to $177.50.
Struggling subprime lender Accredited Home Lenders Holding Co. said it has sued Lone Star Fund V LP and two affiliates to get the private equity firm to follow through with an agreed takeover. Lone Star said Friday in a regulatory filing that Accredited no longer met the conditions of its $400 million acquisition offer. Without a deal, Accredited has cautioned that it may face bankruptcy. The company fell $3.08 or 34.6 percent, to $5.82.