Stocks dropped as soon as the market opened today for BNP Paribas, a French bank suspended operations of three of its funds in the American market for home loans, European Central Bank, and the Federal Reserve injected cash into the financial system because of tightening credit markets.

The Dow Jones industrial average fell more than 1.5 percent about 200 points while the Standard & Poor’s 500 and Nasdaq index were down just as much. The market appeared to positively react to Bush’s statements that the administration wouldn’t favor how private equity firms would be taxed. Many lawmakers have proposed subjecting the investment gains of fund managers known as ‘carried interest’ – to the ordinary income tax rate of up to 35 percent, rather than the capital gains rate of 15 percent.

BNP is the largest publicly traded bank in France which became the latest European lender to announce problems to the worsening credit market in the United States. Several companies have already announced losses this year.

[via NYT]

Tags: Stock, Nasdaq, CEO, S&P 500, Home Loan, BNP Paribas

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