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NEW YORK - Credit fears have played havoc with Wall Street stock portfolios and US investors could suffer more bruises from fresh upheavals sweeping world markets in the week ahead, despite an emergency rate cut.
Confidence was in short supply on Wall St last week as investors sold off stocks amid more glum housing news which has spoiled investors' appetite for mortgage-backed securities and some financial shares.
The Federal Reserve's surprise action on Friday, cutting the interest rate it charges commercial banks and making borrowing cheaper, fuelled hopes the Fed will soon move to trim short-term rates.
"We expect more volatility in both the credit and stock market in coming days," warned Frederic Dickson, an equity analyst at the DA Davidson & Co investment firm.
The blue-chip Dow Jones Industrial Average jumped 233.30 points, or 1.82 per cent, on Friday to 13,079.08. However, over the week it has slumped 1.22 per cent to 13,079.08.
The index has lost more than 900 points since closing at a record high of just over 14,000 on July 19.
There are only a handful of economic releases this week and the most critical is likely to be a report due on Friday on new home sales.
Most economists predict July new home sales slowed to an annualised 830,000 properties after sales dived 6.6 per cent to 834,000 homes a month earlier.
Sales of new homes, which make up a smaller share of the market than existing homes, have plunged over 22 per cent in the past year.
* Britain's top share index posted its biggest one-day gain since early 2003 on Friday, rebounding dramatically from 11-month lows hit around midday. The FTSE 100 index ended up 3.5 per cent at 6064.2.
- Reuters
