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S&P 500 turning higher for two minutes in the day's final hour, as traders speculated the Federal Reserve may allow Fannie and Freddie to borrow from its discount window.
The MSCI World Index, which tracks 1,742 companies in 23 developed markets, slid 11 percent, extending its slump from an October record to the 20 percent threshold that signals the start of a bear market. Fannie, Freddie Fannie shares opened the day down as much as 49 percent and Freddie dropped as much as 51 percent.
Officials may push for the firms, which own or guarantee about half of the $12 trillion of US mortgages, to be placed in a conservatorship if their problems get worse, he said.
Henry Paulson said the government backs the lenders in their current form,'' signaling the administration's intent to keep them as shareholder-owned companies, rather than placing them under government control.
Michelle Smith said in an interview after exchanges closed that the central bank hasn't had talks with Fannie or Freddie about the discount window. Freddie said in a statement after markets closed that the company has no immediate need to raise money and it has a number of options to manage capital. Fannie Mae said in an e-mailed statement after trading hours that it has ample sources of liquidity'' and is maintaining a strong capital base. Fannie Mae remains well equipped to fulfill our critical role in the housing finance system,'' the statement said.
Fannie and Freddie shares have both dropped more than 80 percent in New York trading over the past year on concern they don't have enough capital to weather the worst housing slump since the Great Depression.
S&P 500 Homebuilding Index declined 34 percent to the lowest since 2001. Companies that rely on consumers' discretionary purchases to boost sales retreated 13 percent as a group after the surge in crude oil and gasoline prices bolstered expectations that Americans will reduce spending on vacations, clothes and electronics.
Matthew Kaufler, a portfolio manager at Clover Capital Management Inc. Watching two government-sponsored entities evaporate before our eyes from an equity perspective, and the damage that does to investor confidence on the one hand.
Prices of goods imported into the US rose more than forecast in June as record energy costs and a decline in the dollar made purchases of foreign products more expensive. The 26 percent increase in the import price index last month matched the gain in May, the Labor Department said today.
Stephen Wynn reported second-quarter profit that rose more than some analysts estimated and said it would buy back as much as $500 million more in stock. Discussions over the $70-a-share bid may still fall through, the person said. The benchmark index for US stock options rose to the highest since March.
Equities resumed their retreat from an October record as energy costs surged, banks' credit writedowns topped $400 billion worldwide and unemployment rose, threatening to reduce corporate profits even as Fed officials consider raising interest rates to fight inflation.
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