Washington Observer Reporter – Wall Street’s initial enthusiasm about a $586 billion Chinese stimulus package fizzled Monday, as investors succumbed to anxieties about how U.S. companies will survive a severe pullback in spending.

Stocks got a short-lived boost from China’s plans to boost its economy through a mix of spending, subsidies, looser credit policies and tax cuts. The package could benefit multinational companies with business in China such as General Electric Co. and Caterpillar Inc.

But Wall Street’s optimism quickly waned, as it has tended to do since the mid-September downfall of Lehman Brothers Holdings Inc. and government takeover of the troubled insurance giant American International Group. Market participants realized that while China’s stimulus is a positive sign that governments around the world are working to fix the global economy, the stimulus itself will likely have only a limited effect in the United States.

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Ospraie Management, the US hedge fund led by Dwight Anderson, has seen about $1bn (€678m) in value being wiped out of Ospraie Fund, its biggest, over the last 12 months amid misplaced bets on commodities, according to a report in The Wall Street Journal.

The fund, which is believed to have peaked near $3.8bn in assets late last year, has fallen more than 20% this year as of this week, continuing a downfall that amounted to a negative 13% return in July alone.

Overall, Ospraie, in which Lehman Brothers controls a 20% stake, manages about $9bn in assets. Its investment strategy is focused on energy, financials, retail and health care.

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