Stocks Decline as Fannie, Freddie Fall, Oil Leaps

Market nears 11,000 for first time in two years
By Newser Editors and Wire Services
Posted Jul 11, 2008 9:56 AM CDT
In this May 2, 2007 file photo showing the Fannie Mae building in Washington.    (AP Photo)
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(Newser) – Stocks tumbled this morning as investors focused on troubles at mortgage companies Fannie Mae and Freddie Mac and watched oil prices climb further into record territory. The Dow fell more than 170 points and neared the 11,000 mark for the first time in two years. Investors seemed unimpressed by a statement from Treasury Secretary Henry Paulson, who said the government's focus is ensuring that Fannie and Freddie remain as presently constituted to carry out their mission.

The government-chartered companies at times each lost more than 40% on growing speculation that a government bailout is needed. A collapse of the two financiers would cause further shock to the financial system, and trigger more losses to banks and brokerages with significant holdings of mortgage-backed securities. Meanwhile, a barrel of oil vaulted to a record above $147. In midmorning trading, the Dow fell 173.83, the S&P 500 dropped 19.58, and the Nasdaq 33.03.