March 18, 2008	Tuesday	Rabi-ul-Awwal 9, 1429

NEW YORK, March 17: The stunning news on Sunday night that JPMorgan Chase would acquire the beleagured investment bank Bear Stearns for a fire-sale price of $236 million, or $2 a share, sent the stocks on Wall Street falling in mid-morning trading on Monday. But the market recovered slightly by late afternoon.

After falling nearly 200 points at the start, the Dow Jones Industrial Average (DJI) was down 106.65 points in midday trade to 11,844.44, with 21 of its 30 components posting declines.

Blue-chip financials were among those hit, with Citigroup Inc. down 7.2 per cent, and American International Group Inc. (AIG) off nearly 5 per cent.

The S&P 500 and Nasdaq indexes were down more than 1.5 per cent each. Shares of financial firms plummeted as one of Wall Street’s most storied banks, Bear Stearns, lay on its deathbed and central bankers scrambled to stave off a devastating crisis of confidence in the investment community.

Wall Street is waiting to hear from the Federal Reserve on Tuesday , when the central bank is expected to lower interest rates yet again. Fed Fund Futures, a security traded in Chicago that bets on the Fed’s movement of the country’s interest rate, are predicting a nearly 100 per cent chance the Fed will cut a massive 1 per cent, to bring the rate down to 2 per cent.

Treasuries soared as investors pulled their money from the stock market and moved it into the relative safety of government bonds.

Bear’s sale marks the first death of a major Wall Street institution as a result of the global credit crunch and the US subprime mortgage mess said a business report on Dow Jones.

Investors remain fearful that a panic in the credit markets — which threw Bear Stearns to the brink of bankruptcy and forced a sale to JPMorgan Chase at the humbling price of $2 a share — could spread to other big brokerage firms with extensive exposure to toxic mortgage-backed securities.

The Dow Jones report said that the Federal Reserve launched a pre-emptive effort on Sunday to stanch a worldwide stock sell-off, carrying out a series of emergency measures including a cut to the interest rate at which the Fed lends to banks in the hopes of shoring up confidence in the credit markets.

According to a report in the Financial Times the stock markets in Asia’s two emerging giants, China and India, suffered the biggest losses on Monday.