Industry News

Fed’s $41 billion cash infusion doesn’t reassure investors

Stocks, bond yields plunge on economic worries

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The Federal Reserve sent $41 billion of short-term reserves surging into financial markets Thursday -- the biggest such move since the Sept. 11, 2001, terror attacks -- as stocks plummeted over fears that losses in mortgage lending are worsening. Analysts at CIBC World Markets downgraded Citigroup's stock, saying the company must raise more than $30 billion in capital as write-downs on securities backed by home loans cut into the company's bottom line. Some analysts said investors are worried about similar problems at other banks. The cash infusion was intended to provide liquidity to financial markets by giving banks access to more money to lend. But the Dow Jones industrial average fell 362 points Thursday, or 2.6 percent. Investors are also concerned that the Federal Reserve may be done cutting interest rates. On Wednesday, members of the Federal Reserve's Open Market Committee said that a 25-basis-point reduction in the federal funds rate to 4.5 percent may reflect a ...