Stagflation Jitters Sink Stocks

Greenspan: 50-50 chance of recession
By Jonas Oransky,  Newser Staff
Posted Dec 17, 2007 3:29 PM CST
Stagflation Jitters Sink Stocks
Fed Cuts Interest Rate For Third Time   (Getty Images (by Event) Individuals)

(Newser) – The markets resumed last week’s downward spiral today, with the Dow diving 172.65 to 13,167.20 despite typically buoying news of major deals. The Nasdaq slid 61.28 to 2,574.46 and the S&P closed at 1,445.90, down 22.05. Alan Greenspan said he foresees a 50-50 chance of recession and warned of stagflation, the Journal reports.

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Said one concerned strategist, “The Fed is neutered. The market is left in this helpless position.” The bad news on the day was a warning from Moody’s that subprime losses might lead to lowered bond-insurer credit ratings. Meanwhile, several big deals were revealed, including a $1.4 billion cash infusion from Goldman Sachs for real estate developer Related Cos. (Read more Dow Jones stories.)

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