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Stocks Fail To Continue Momentum

Bush To Hold Talks On World Economic Crisis

POSTED: 1:49 am EDT October 14, 2008
UPDATED: 9:20 pm EDT October 14, 2008

Stock prices on Wall Street ended a relatively calm day with a moderate decline, with the Dow failling 77 points as profit-taking set in after Monday's massive advance. It's the first time in nine sessions that the Dow hasn't closed up or down in triple digits.

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After some early gyrations, stock prices fluctuated during the day, but the Dow and the Standard & Poor's 500 index were often in the plus column. Investors were optimistic about the government's plans to spend $250 billion to buy stock in private banks, but they also decided to collect profits from the surge that sent the Dow up 936 points.

The Dow closed at 9,310 level after being up more than 400 and down more than 300. The Nasdaq composite index showed a sharper decline, falling more than 3 percent to the Dow's pullback of under 1 percent, as investors gravitated toward stocks they believed would benefit most from the government's financial sector plans.

President George W. Bush plans to hold talks on the global economic turmoil Saturday at his Camp David retreat with French President Nicholas Sarkozy.

The White House, in announcing the president's plans, said Tuesday that European Commission President Jose Manuel Barroso will also attend the weekend meeting.

White House press secretary Dana Perino said that Bush spoke by phone Tuesday morning with Sarkozy and the leaders of Britain and Germany following meetings at the White House on Monday with Italian Premier Silvio Berlusconi. Bush also has scheduled a Cabinet meeting at the White House on Wednesday.

Bank Shares Plan

The government's move to use a chunk of the $700 billion bailout funds to buy bank shares follows a similar one announced Monday by European governments to invest about $2 trillion in their own troubled banks.

Bush said the moves are "not intended to take over the free market, but to preserve it."

Bush said the federal government will use some of the $700 billion bailout funds to inject money into banks "by purchasing equity shares."

He said the Federal Deposit Insurance Corp. will "temporarily guarantee" most new debt issued by insured banks. The FDIC also will expand government insurance to cover all non-interest-bearing accounts, aiding small businesses in covering their day-to-day operations.

The president also said the Federal Reserve will "soon finalize work" on a new program to serve as a buyer of last resort for commercial paper.

Bush, in the latest of a series of statements on the troubled economy, said that and other steps will help restore confidence and "return our economy to the path of growth and prosperity."

The government is expected to initially purchase stock of nine large banks, but the program is expected to be expanded to many others. Among the initial banks participating will be all of the country's largest institutions, including Citigroup Inc., Wells Fargo & Co., JPMorgan Chase & Co, Bank of America Corp. and Morgan Stanley, said one official, who added that administration briefers did not provide any amounts that would be received by individual banks.

There would also be a bold step to unlock a vital credit flow -- bank-to-bank lending, which has dropped sharply over fears of repayment amid billions in bank losses.

Candidates Offer Solutions On Campaign Trail

Both Sens. John McCain and Barack Obama offered new ideas to combat the financial crisis.

McCain announced that on Tuesday, he would unveil new economic proposals aimed at middle-class taxpayers.

Campaign spokesman Tucker Bounds said McCain "will address the ongoing financial and economic crisis, with a special emphasis on those most badly hurt: workers, homeowners, savers and seniors."

Word of the proposals came on the same day McCain delivered his toughest criticism so far of Bush's economic policies.

In Virginia, McCain said, "We cannot spend the next four years as we have spent much of the last eight: waiting for our luck to change."

During a campaign stop in Toledo, Ohio, Obama proposed steps to heal the economy, including a 90-day moratorium on home foreclosures at some banks and a two-year tax break for businesses that create new jobs.

Obama also proposed allowing people to withdraw up to $10,000 from their retirement accounts without any penalty this year and next.

The Democratic presidential candidate said his proposals, with a price tag of $60 billion over two years, can be enacted quickly.



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