What's causing Wall Street's angst?
Traders on the floor of the New York Stock Exchange
TEXT OF INTERVIEW
Scott Jagow: Let's go to New York and check in with our reporter Amy Scott, who covers Wall Street. Amy, what's with all this new angst in the stock market?
Amy Scott: Well, there seem to be three big issues -- the first being oil, which rose above $142 a barrel in New York this morning for the first time. Then there is the credit situation. Yesterday, Goldman Sachs warned that Citigroup is facing another $8 billion plus in credit-related write-downs, another $4 billion or so at Merrill Lynch. And then finally, the interest rate situation. You know, earlier this week, the Federal Reserve didn't raise interest rates, but implied that it may have to fight inflation. And Wall Street doesn't like that because it raises the cost of borrowing for businesses.
Jagow: Right. But this is nothing new, we knew all this already. So why the big plunge yesterday?
Scott: Well, what I'm told is that, you know, any one of those factors would be bad news, but all three converging at once was more than the markets could take. The headwinds, as one analyst put it to me today, are blistering.
Jagow: Well, this has been the worst June sine 1930 so far. What are the prospects for a turnaround here in the last couple of days in the month?
Scott: Well, you know, typically you see a little bit of a bounce after a big sell-off like this, and I think analysts are predicting we may see a little bit of that today. As we heard from Stephen earlier, you know, there's some positive economic news that might help with personal income and spending. The good news is that, one economist I spoke to this morning says, you know, when everyone's this gloomy, as depressing as that is, it's usually when the market starts to turn around.
Jagow: All right, Amy Scott in New York. Thanks.
Scott: Thanks, Scott.