Well, all the market's earlier good work has been undone by news of the Bear Stearns rescue package. The bank had long been rumoured to be in trouble, and even denied liquidity problems a few days ago.
Now push has come to shove, it needs to be bailed out by the Federal Reserve and JP Morgan. Interestingly Bear is rumoured to be invested in the collapsed Carlyle Capital hedge fund to the tune of almost $2bn. Was this the final straw?
To see some US reaction, Barry Ritholtz is currently doing a live blog on the situation.
Of course, Bear Stearns is unlikely to be the end of it. So the market is torn between relief that the news is out in the open, and concern that other financial institutions are also in deep trouble.
At the moment the Dow Jones industrial average is down 150 points or so, while the FTSE 100 is 46.5 points down at 5645.9. The dollar continues its plunge, hitting a new low against the euro, while gold is benefiting from the search for a safe haven and jumps to an all time high of £1004 an ounce.
