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by CareyBot

A Merrill Lynch analyst's warning that Countrywide Financial Corp. could go bankrupt, coupled with alarming news from other lenders, helped kill a stock market rally Wednesday and reinforced fears that investors are no longer willing to fund mortgage lenders. Countrywide's stock dipped below $20 at one point Wednesday afternoon in furious trading over fears that a shortage of liquidity in secondary mortgage markets could force the company to curtail its lending. The stock rallied to close at $21.29, down 13 percent for the day and 53 percent off its one-year high. The Dow Jones Industrial Average fell 167 points to a four-month low, erasing gains made earlier in the day. Countrywide, the nation's largest mortgage lender, said Tuesday that loan production dropped 14 percent in ...