Stocks Fall as Fed Looms

Updated from 4:17 p.m. EDT

Stocks were sluggish to start the week as the fallout from the credit crisis continued to hit a mortgage lender overseas, hurting sentiment a day before an interest rate decision from the Federal Reserve.

The Dow Jones Industrial Average fell 39.10 points, or 0.29%, at 13,403.42. The S&P 500 was off 7.60 points, or 0.51%, at 1476.65. The Nasdaq Composite fared the worst, dropping 20.52 points, or 0.79%, to 2581.66.

British lender Northern Rock pressured European bourses, and by extension the U.S., falling 40% on word that its customers withdrew roughly $4 billion from its branches.

On Friday, Northern Rock dropped more than 20% after the company sought emergency funding from the Bank of England. The company also warned that 2007 earnings will come in below current estimates and that profits in 2008 would also be soft.

London's FTSE 100 ended down 1.7%, and the CAC 40 in Paris was off 1.8%. In Asia, China's Shanghai Composite rose 2.1%, while Hong Kong's Hang Seng declined 1.2%. Japan's Nikkei 225 was closed for a holiday.

While most expect the Fed to cut the fed funds rate by 25 basis points when the Federal Open Market Committee convenes on Tuesday, traders were disturbed by comments out of former Fed Chairman Alan Greenspan during a televised interview with CBS over the weekend.

Greenspan said in the interview, broadcast Sunday night on 60 Minutes, that the forecast for the U.S. economy is "pretty gloomy" and that "the re-emergence of inflation" is the worst problem facing the Fed.