Having been hit hard by the chaos on Wall Street, General Electric's stock fell almost 7% on Wednesday, reflecting investor concern over its financial-service unit in the midst of the global credit crisis.
The Federal Reserve's rescue plan for AIG, coupled with a similar plan by the Treasury Department for Fannie Mae and Freddie Mac, could mark the end of 30 years of deregulation by the federal government. The government's involvement in financial markets follows similar shifts in food safety, airlines and trade and signals that increased regulation is now more acceptable to businesses and voters.
During the past year, as the credit crisis plagued markets and financial institutions, the U.S. government pledged more than $600 billion to help rescue some of the largest banks, insurance companies and other financial firms. Ongoing problems are starting to stress even the deep resources of the Federal Reserve, prompting it to ask the Treasury Department to raise capital by selling debt.
Invesco PowerShares is expected to launch two sector exchange-traded funds Thursday, one concentrating on global transportation stocks and the other on global biotech firms. The Global Progressive Transportation Portfolio and the Global Biotech Portfolio take slightly different positions from their competitors: The transportation portfolio has an energy bend, and the biotech portfolio has a global bend.
Gold futures soared $70 an ounce Wednesday, the largest daily gain in dollar terms in more than 20 years, as turmoil continues on Wall Street. Gold continued to rise more than $20 in electronic trading after the market closed.
As credit markets seize up, jittery investors are fleeing to the safety of Treasury bills and other investments, which could cause further, serious damage to the U.S. economy. "It's like having a fire in a cinema," said Hyun Song Shin, an economics professor at Princeton University. "Everybody is rushing to the door. You are rushing to the door because everyone is rushing to the door. Clearly, as a collective action, it is a disaster."