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Dow Jones huge plunge 360 points on Citigroup share downgrade.

Posted by Adrian on November 2, 2007

After just one day when the Fed gave a rate cut of 0.25%, the Dow Jones lost 360 points on Thursday’s trading.

The 360 point drop on the Dow Jones was due to an analyst stock downgrade and capital fears of Citigroup Inc, American’s largest bank by assets which lead to the shares falling to $38.51

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Citigroup, Inc (NYSE:C).

“Citigroup lost $2.85, or 6.9 percent, to $38.51, the steepest slide in the Dow average. CIBC lowered its recommendation on the shares to “sector underperform” from “sector perform.” Citigroup may have to cut its dividend, raise cash or sell assets to raise more than $30 billion to shore up its capital, analysts led by Meredith Whitney wrote in a report to clients. ” Bloomberg

All due to the lingering credit crisis stemmed from the huge losses, profit downgrades and write-downs that has been inflicted onto the finance sector. This latest news regarding Citigroup Inc has only reiterated the seriousness of the credit crisis, with the markets now in a panic selling. We will also see problems in interbank borrowing and financing, if further losses are stated by any one the bigger banks, including Citigroup Inc –  global liquidity will freeze up again.

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