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Volatile stock market ends day mostly up; Dow regains 13,000
Freddie Mac's $2 billion loss sent its stock down 28.7 percent. Sibling Fannie Mae's shares fell 24.8 percent.
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NEW YORK - Wall Street finished an extremely volatile session mostly higher Tuesday after investors, still uneasy about mortgage-related problems at the nation's major lenders, decided to interpret comments from the Federal Reserve as suggestive of another interest rate cut.
In minutes from their Oct. 30-31 meeting, Fed policymakers said their decision to lower rates for a second straight meeting "was a close call." But in a separate economic forecast, they pointed to slowing growth next year, an uptick in unemployment and moderating inflation -- which would seem to portend a possible rate decrease when the Fed meets next, on Dec. 11.
On Tuesday, market indexes changed direction several times while analysts sorted through the Fed statements.
Meanwhile, Freddie Mac posted a $2 billion quarterly loss, escalating jitters about the government-sponsored mortgage lender and its larger counterpart, Fannie Mae. Also, an analyst downgraded Countrywide Financial Corp., pointing to continuing credit problems that had investors uneasy even before the Fed released its minutes.
"The headlines that were really roiling the market were Countrywide, Fannie Mae, Freddie Mac, and the FOMC minutes, which were discouraging for investors," said Joe Sunderman of Schaeffer's Investment Research.
The Dow Jones industrial average finished ahead 51.70, or 0.04 percent, at 13,010.14, after making 100-point swings in either direction throughout the day. The eventual gain followed Monday's drop of more than 200 points.
Broader stock indicators also ended higher. The Standard & Poor's 500 index rose 6.43, or 0.45 percent, to 1,439.70, and the Nasdaq composite index rose 3.43, or 0.13 percent, to 2,596.81.
Freddie Mac fell $10.76, or 28.7 percent, to $26.74, and Fannie Mae fell $9.33, or 24.8 percent, to $28.25.
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