Wall Street dropped sharply in early Morning Friday, as the bailout plan fell through and Washington Mutual Inc., one of the U.S. largest banks, was seized by the Federal Deposit Insurance Corp..
The setback of the 700 billion U.S. dollars bailout plan unnerved investors. Republicans splintered over the proposed rescue plan by Treasury Secretary Henry Paulson, not long after key lawmakers of both parties declared they'd reached fundamental agreement on the government's proposed 700 billion dollars bailout plan.
Investors also seemed panic after the Federal Deposit Insurance Corp. seized Washington Mutual on Thursday and sold its branches and assets to JPMorgan Chase for 1.9 billion dollars. It was the largest U.S. bank failure in history. JPMorgan Chase also announced that it would raise 8 billion dollars of new capital by selling common stocks.
Meanwhile, an economic report signaling economic slowdown weighed on the market. The U.S. Commerce Department reported Friday that gross domestic product, or GDP, increased at a 2.8 percent annual rate in the second quarter. That fell short of the 3.3 percent growth estimated a month ago.
The Dow Jones fell 148.22 to 10,873.84. Broader indexes also moved lower. The Standard & Poor's 500 index dipped 18.60 to 1,190.58; and the Nasdaq fell 43.92 to 2,142.65.