Stocks Keep Bleeding After Fed Cut

"There can be little doubt the Fed would have waited until the meeting next week if it had not been for the state of the markets," said Ian Shepherdson, chief economist with High Frequency Economics. "This move is not an instant fix. The economy is still staring recession in the face, but at least the Fed now gets it."

U.S. Treasury prices rallied following the Fed announcement. The 10-year note was up 1-9/32 in price, cutting the yield to 3.48%. The 30-year bond was up 1-3/32, yielding 4.22%.

Global markets have been sliding over the past two days. Overnight, Japan's Nikkei 225 lost 5.7% and has fallen 10% since the start of the week. Hong Kong's Hang Seng dropped 8.7% during its last session.

On Monday, European bourses notched their worst losing session since the terrorist attacks on Sept. 11, 2001. Markets were stabilizing on hopes the European Central Bank and the Bank of England would cut rates.

Domestic equities didn't trade Monday in order to observe Martin Luther King Jr. day.

The new session marked the start of a busy week for earnings. DuPont (DD Quote) posted a 37% decline in fourth-quarter profit from a year ago, but results still topped the Thomson First Call average estimate. Fellow Dow component Johnson & Johnson (JNJ Quote) also reported fourth-quarter earnings that beat forecasts.

DuPont slipped 0.4% to $42.54, and J&J lost 1.5% to $65.27.

Embattled bond insurer Ambac Financial (ABK Quote) posted a quarterly loss of $3.3 billion, but shares surged 28.6% to $7.97 after interim CEO Michael Callen said the company "is evaluating strategic alternatives with a number of potential parties."

Apple (AAPL Quote) fell 3.5% ahead of its earnings report after the bell. The company's fiscal first-quarter results beat estimates, but its guidance for the current quarter fell short of Wall Street's estimates.

Away from equities, commodity prices were uneven. Crude oil fell 71 cents to end the day at $89.21 a barrel, while gold futures jumped $8.60 to close at $890.30 an ounce.

With the financial markets in chaos, the White House is attempting to pass a fiscal stimulus plan. President Bush announced the outline of a $145 billion proposal Friday, one he hopes will be enacted swiftly in order to keep the economy from entering a recession.

Treasury Secretary Henry Paulson gave a speech ahead of the open, saying that while the U.S. economy is resilient, the stimulus package is necessary and must be implemented quickly in order to boost the economy this year. Action, he said, must be "swift, robust, broad-based and temporary."