U.S. stocks are trading lower as Wall Street reacts to a government-supported buyout of financially stricken Bear Stearns -- one of the world's largest investment banks.
Stock markets across the globe have plunged since the buyout was announced on Sunday. Under the buyout plan, another giant U.S. banking firm, J.P. Morgan Chase, will purchase Bear Stearns, with the U.S. government taking on some of the risk. The sale is valued at 250 million dollars -- a tiny fraction of the 20 billion dollars Bear Stearns was worth a year ago.
The U.S. government has taken a series of measures to avert what some fear could be the collapse of other investment firms in a domino effect. The Federal Reserve lowered the interest rate Sunday and is expected to make another cut Tuesday. It makes loans cheaper for banks, many of which are struggling to cope with bad loans made to people who defaulted on their mortgages. While the moves are designed to pour more money into the economy, they also have pushed the U.S. dollar to record lows. The uncertainty today pushed oil and gold prices to record highs on world markets.