The fall was driven less by disappointing profits\u201d\u201dthough average earnings growth at American companies has fallen back into single digits this year\u201d\u201dthan by rising borrowing costs<\/b>. Market interest rates have risen as investors become increasingly concerned about rising delinquencies in subprime mortgages and the effect of these on hedge funds and banks holding securities backed by such loans. These worries grew more acute this week when Countrywide, America\u2019s largest mortgage lender, indicated that the subprime storm was starting to lash higher-quality mortgages. Few now expect to see signs of recovery in the housing market before the middle of next year, while a fast-growing number fear its troubles spilling into the broader economy. By Thursday afternoon, futures markets were pricing in a 100% chance of the Federal Reserve cutting short-term interest rates by December.<\/p>\n
It is a repricing of risk that is at the heart of this latest move. Read it all<\/a>.<\/i><\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" The fall was driven less by disappointing profits\u201d\u201dthough average earnings growth at American companies has fallen back into single digits this year\u201d\u201dthan by rising borrowing costs. Market interest rates have risen as investors become increasingly concerned about rising delinquencies in…<\/span><\/p>\n