U.S. stock markets have given up earlier gains to bounce in and out of negative territory and a U.S. news report is pegging the reversal to investors being spooked by rumours that another hedge fund may have run into financial trouble. The notion that a hedge fund could face trouble rekindled concerns that the recent stumbles in the financial sector may not be entirely on the mend, the Associated Press reported. Tom di Galoma, head of Treasurys trading at Jefferies & Co., told the news agency that the names of a number of hedge funds have been "bandied about as possibly being in trouble," but that it is impossible to discern whether the stories are true. At about 11 a.m., the Dow Jones industrial average was off 25.12 points or 0.2 per cent at 12,353.49, having earlier traded as high as 12,486.89. Both the S&P 500 and the Nasdaq were clocking similar performances. North of the border, the S&P/TSX , which rose more than 1.7 per cent at the opening bell, had fallen back to 12,934.96, up just 0.21 per cent but had not dipped into the red.
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