U.S. Stocks Head for Lower Open Amid Continued Credit Concerns

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U.S. Stocks Head for Lower Open Amid Continued Credit Concerns; Central Banks Add Liquidity

U.S. stocks moved toward another opening plunge Friday after Thursday's huge sell-off and as bank regulators including the Federal Reserve injected cash into money markets, stoking concerns of a
more pronounced liquidity crunch. Futures came off of their lows Friday after the Fed's move.

Early Friday, the Fed announced a three-day repurchase agreement, or "repo," to inject liquidity into the market. The Fed said early Friday it would accept $19 billion in mortgage backed securities. The move occurred after the fed funds rate, the rate banks charge each other for overnight loans,
ticked above 6 percent again Friday -- well above the Fed's target of 5.25 percent.

The Fed stepped in after the same occurrence Thursday, injecting a larger-than-normal $24 billion in temporary reserves to the U.S. banking system. In a repo, the Fed arranges to buy securities from
dealers, who then deposit the money the Fed has paid them into commercial banks.

The Fed's move pushed the fed funds rate down to 5.375, still above its target.
In Asia, which had largely missed the worldwide pullback Thursday, stocks skidded after regulators including the Bank of Japan added liquidity. The European Central Bank for the second day added
cash to its money markets.

These banks and others around the world haven't worked together to inject liquidity into the
markets since the aftermath of the Sept. 11, 2001, attacks. But the measures, which are intended to keep currency markets well-oiled, also seemed to confirm investor fears of a larger problem in the credit markets.

Such unease sent the Dow Jones industrials down 387 points, or 2.8 percent, Thursday. The
broader Standard & Poor's 500 index fell 2.96 percent.

Stock markets abroad took a drubbing Friday amid concerns that diminishing access to credit will
derail the global economy's strong growth and bring a halt to the corporate dealmaking that has
spurred stock markets in the U.S. and abroad.

Bonds rose again Friday as investors again sought the relative safety of Treasurys. The yield on the
benchmark 10-year Treasury note fell to 4.74 percent from 4.79 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose.

The concerns about credit and the effect of subprime loans, those made to borrowers with weak
credit, were undiminished Friday, perhaps in part because of comments from Countrywide Financial
Corp.

The nation's biggest mortgage lender said in a regulatory filing Thursday that disruptions in credit
and secondary mortgage markets pose a risk to the company and could hurt its financial standing in
the short-term. Earlier in the week, Countrywide said it still has access to capital despite the credit
crunch.

In economic news, the Commerce Department said U.S. import prices rose for a fifth consecutive
month in July, increasing 1.5 percent. Prices rose in part amid increased energy costs. The figures
could stir concern among the Fed about inflationary prices. The central bank said after its August
meeting this month that its primary concern remains inflation.

JKL

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