Source: FT.com
US financial stocks suffered their worst one-day fall since 2000 on Thursday, as investors’ recent optimism was hit by renewed fears over the health of Washington Mutual and weak housing data.
Financial shares had rallied more than 30 per cent in the preceding five days amid relief at smaller-than-expected losses at several leading lenders and a government crackdown on abusive short-selling.
But the market cracked in the morning after the release of figures showing sharp drops in US home sales and house prices. The rout then gained momentum after Gimme Credit, a research firm, suggested that creditors and customers were cutting their exposure to WaMu – prompting a spirited response by the lender.
WaMu shares fell as much as 23.4 per cent, before ending 13.3 per cent lower as the S&P Financials index shed 6.7 per cent. Fannie Mae and Freddie Mac, the government-sponsored mortgage financiers, both slumped nearly 19 per cent, while Merrill Lynch fell 14 per cent, Lehman Brothers 12 per cent, Citigroup 10 per cent and JPMorgan 5.9 per cent.
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