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NY Stock Exchange Shakes Off Tuesday's Sell-Off


The Dow Jones Industrial Average climbed back above the 12,000 level Wednesday after earlier falling to its lowest level in four months. VOA's Barry Wood reports the volatile market is feeling the jitters over problems in mortgage lending.

The Dow average gained 57 points to 12,133. At midday the market had been down nearly 100 points. On Tuesday the Dow average fell over 200 points amid growing worry about the health of the mortgage market. Foreclosures on homes have risen sharply and an increasing number of the least credit worthy borrowers are behind on their monthly payments.

There is fear that problems in the subprime market could spread. Home prices have been flat in the United States over the past few months and several experts anticipate outright declines over the course of this year.

Yale University economist Robert Shiller is among those predicting home price declines.

"We have been [over the past seven years] in the biggest housing boom in U.S. history," said Robert Shiller. "So, we're in uncharted territory and it is hard to make predictions. But given how much prices have risen and given the situation in the mortgage market, I think we're starting to see signs of a protracted decline."

General Motors, the biggest U.S. car company, is among the financial institutions taking losses on sub-prime lending. GM's finance arm, GMAC, has been an active sub-prime lender. That division is in the process of being sold as GM attempts to rebound from record financial losses in 2006.

European and Asian markets were down sharply on Wednesday with the main London index registering its biggest loss in one year. Several European exchanges lost over two percent. The dollar rose against the yen and gold lost $7 to $642 an ounce.

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