NEW YORK (AP) – Investments banks’ stocks plunged to their cheapest prices in years Monday, as the unraveling of a host of investments raised the prospect of more losses on Wall Street and a seize-up in financing.
Traders and analysts said Monday the distaste for risk in the bond market – reflected in depressed or non-existent trading of mortgage bonds, auction-rate securities and various kinds of short-term debt – has reached a new height.
“There is a tremendous amount of anxiety in the market,” said T.J. Marta, fixed-income analyst at RBC Capital Markets. “Things are bleak.”
Prices in the bond market determine how much it costs everyone from utility companies to college kids to borrow money. The tumult in the bond market threatens to crimp banks’ profits, making it harder for conusmers to borrow money.
Bear Stearns, whose spokesman Monday denied rumors that the brokerage faces a liquidity squeeze, led shares in the investment banking sector downward. Its shares plunged 11 percent Monday to close at $62.30 after sinking to $60.26, its lowest level since March 2003. Citigroup’s stock fell almost 6 percent and slipped below $20 for the first time since the bond market crisis of the late 1990s. Its stock has lost almost a third of its value in 2008 and more than half its value in the past year.
