Hedge Fund Rumors Sink Markets

Jan 25 2008 | 11:44am ET

Word that a hedge fund may be in trouble turned the markets skittish this morning.

The Dow Jones Industrial Average had been up more than 100 points in early Friday trading. But rumors that a large hedge fund was liquidating positions unnerved the market, and the Dow gave back all of its early gains, and plummeted again after a mid-morning rally brought it back into the black. As of 11:40, the Dow was up about 7 points.

According to the Associated Press, a number of hedge funds have been mentioned as the possible source of the volatility. But the fear that one could be in trouble—and its possible effects on the market—may have renewed fears that the battered financial sector could again be derailed.

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