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http://sns.chicagotribune.com/news/nationworld/sns-usmarkets.story?coll=sns%2Dnewsnation%2Dheadlines Stocks tumble after interest rate cut
Investors had hoped for bigger reduction
By Amy Baldwin AP Business Writer
March 20 2001, 3:19 PM CST
NEW YORK -- Stocks fell sharply today after the Federal Reserve disappointed Wall Street with a half-point interest rate cut. Skeptical that the move would be enough to help the economy and corporate earnings recover soon, investors quickly sold off shares.
Many investors had hoped for a more aggressive 0.75 percentage point rate cut, believing a cut of that size was needed to prompt consumers and businesses to increase their spending and reinvigorate the economy.
After heavy trading late today, the Dow Jones industrials fell 238.35 to close at 9720.76. The blue chips were trading at the 10,000 level just before the Fed announced its decision about 2:15 EST.
Broader market indicators followed, with the Nasdaq composite index tumbling 93.72 to 1857.46 and the Standard & Poor's 500 declining 28.19 to 1142.62.
The market was disappointed by the Fed because the central bank needed to "do something dramatic to show that it recognizes the need for improved confidence," among consumers and investors, said Alan Ackerman, executive vice president of Fahnestock & Co.
"It is fair to say with prices drifting downward everything appears to be for sale from Main Street to Wall Street," Ackerman said.
Investors were also confused about how much the economy is hurting, because economic data is unclear about the extent to which growth has slowed, said Ronald J. Hill, investment strategist at Brown Brothers Harriman & Co. He noted that while slumping consumer demand has created big inventory gluts, employment remains strong.
"The market is sort of groping for a bottom. We haven't had a real cathartic selloff, but last week felt pretty ugly," Hill said.
Wall Street's pessimism has been growing since last week's debacles, giving the Dow its worst-ever weekly point drop of 821.21.
Advancing issues outnumbered decliners nearly 9 to 5 on the New York Stock Exchange where volume was 927.13 million shares, compared with 841.03 million at the same point Monday.
The Russell 2000 index, which tracks the performance of smaller companies stock, was down 1.28 at 449.99.
Overseas, Japan's Nikkei stock average slipped 0.3 percent amid fears that deflation and banking problems would cripple the economy.
However, stocks in Europe moved higher. Germany's DAX index rose 2.2 percent, Britain's FT-SE 100 advanced 1.7 percent, and France's CAC-40 climbed 1.8 percent.
Copyright © 2001, The Associated Press
Fair use for educational/research purposes only!
-- Martin Thompson (firstname.lastname@example.org), March 20, 2001
OK, What now Alan?
-- Martin Thompson (email@example.com), March 20, 2001.
I hate to say this but my feeling is the Dow is headed to 5000! Nasdac is headed to 1200. Just a feeling I have. Like when i bought renters Insurance on a hunch & My Duplex BURNED to the Ground.
Glad I have NO money on the Come line!
-- Geno-Ca (firstname.lastname@example.org), March 20, 2001.