Stocks end lower as concerns about bailout weigh

NEW YORK - Stocks fell on Tuesday on fear that congressional wrangling could delay a proposed US$700 billion plan to rescue the financial sector, increasing worries about the struggling US economy.

Downgrades also hurt the shares of Bank of America, off 2.5 per cent, while energy company shares weakened with the price of oil.

The main focus, though, was on the government's rescue plan, which involves mopping up bad mortgage debt from bank balance sheets in an effort to get them lending again.

Federal Reserve Chairman Ben Bernanke on Tuesday urged Congress to approve the plan quickly, warning a delay would put the economy at risk, but lawmakers pushed back, saying it still lacked detail.

The Dow Jones industrial average was down 161.52 points, or 1.47 per cent, at 10,854.17. The Standard & Poor's 500 Index was down 18.87 points,1 or 1.56 per cent, at 1,188.22. The Nasdaq Composite Index was down 25.64 points, or 1.18 per cent, at 2,153.34.

Mr Bernanke told the Senate Banking Committee that 'action by Congress is urgently required to stabilise the situation and avert what could otherwise be very serious consequences for our financial markets and our economy.'

But doubts about the bailout plan took centre stage by late afternoon, and some traders said that even a swift passage of the bill would not lead to the end of the credit crisis or necessarily bolster the slumping US housing market.

Source: Singapore Business Times - 24 Sep 2008