Today's Market: Stocks End at Day's Lows After Fed Drops the Ball
Wall Street hit the sell button after the Federal Reserve
cut the fed funds rate
-- the interest rate at which banks lend to each other overnight -- by 50 basis points. The Dow ended down 239 points to 9720 and the Nasdaq lost 94 to 1857.
, which popped above the key 10,000 watermark at 2:20 p.m. EST, has been trading back below that point since about 2:25 p.m. EST. Similarly, the Nasdaq Composite Index
was trading at its lowest level of the day, after a brief stint above the flatline. In a move that left investors trying to figure out where to take stocks, the Fed cut the fed funds rate
by 50 basis points, to 5% today. Ahead of the decision, investors were hoping for a 75 basis-point cut to get the market back on its feet. But the Fed opted for the smaller move, probably because recent economic reports have indicated a slowdown, rather than a recession, in the economy. Ahead of the decision, most traders were gaming for a half-percentage point cut. "I think it's 50, a little selloff and then you buy them," said Brian Finnerty, head of trading at C.E. Unterberg Towbin. "The third cut is usually the one that makes things go up, and recent negativity in analyst reports indicates a real bottoming sentiment -- that's when things start to turn." TheStreet.com tracked recent Fed moves, including the two cuts in January, and the
market's reaction. Since the beginning of the year, the Federal Reserve has acted drastically in cutting interest rates, in order to spur borrowing and demand in the economy, which fell sharply in the fourth quarter of last year. The Fed has now lowered the fed funds target by 1.5% from 6.5%, where it stood before the committee undertook a surprise rate cut Jan. 3.
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| Dow Jones | S&P 500 | NASDAQ | 10-Year Note | |
|---|---|---|---|---|
| 10,452.00 | 1,107.93 | 2,201.05 | 36.03 |
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