The near-collapse of a $20 billion pair of hedge funds has left Wall Street jittery, though not yet in panic mode, the Journal reports. Speculation about the fate of the Bear Stearns funds rippled through yesterday's markets, where stocks and bonds dipped widely; news that banks were struggling to unload subprime-backed securities had traders biting their nails.
"The fear is that this Bear situation is the tip of the iceberg and could lead to other funds being liquidated," one said. But 10-year Treasury notes and gold, traditional shelters in turbulent markets, both fell, indicating investors are not running for cover just yet. And recent scares (like housing) may provide a roadmap for recovery from the subprime debacle.