NEW YORK, Oct. 6 (UPI) -- Investors reacted positively to Merrill Lynch's news that it would write down $5 billion primarily in subprime and other risky loans.
News of the investment firm's first loss since the end of the technology boom increased the price of its stock as investors appeared relieved that Merrill had provided information about its problems and a belief that the worst was over, The New York Times reported Saturday.
Shares rose $1.89, to $76.67 by close of business Friday. Merrill estimated it would lose up to 50 cents a share for the quarter, compared with a profit of $3.17 a share, or $3 billion, for the quarter a year ago, the Times reported.
The size of the loss was second only to the $5.9 billion taken by Citigroup, which is three and a half times the size of Merrill, the Times said.
Rating agencies Moody’s and Fitch downgraded Merrill’s long-term debt outlook to negative from stable, with Moody's saying the quality of risk management at Merrill Lynch had diminished.
