Oil Drops, but Rally Fades

S&P 500 off 20% from October high
By Nick McMaster,  Newser Staff
Posted Jul 7, 2008 3:38 PM CDT
Traders work on the floor of the New York Stock Exchange in this undated file photo.   (AP Photo/Richard Drew)
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(Newser) – The markets saw modest losses today after a rally spurred by a drop in crude prices sputtered over capital concerns at Fannie Mae and Freddie Mac, MarketWatch reports. The Dow fell 56.58 to 11,231.96, the Nasdaq dropped 2.06 to 2,243.32, and the S&P 500 fell 10.59 to 1,252.31.

Oil retreated to around $141 a barrel, aided by a stronger dollar. Fannie Mae and Freddie Mac saw double-digit losses after a Lehman analysis said the lender would need to raise billions of dollars if a proposed accounting rule goes into effect. The drop in financials overshadowed strength in the technology sector, with Microsoft and Yahoo both up on news of their on-again merger talks.