Rate-Cut Hangover: Stocks Trade Lower

Tuesday's rally gives way to profit-taking Wednesday as Morgan Stanley posts a wider-than-expected loss.
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Updated from 11:21 a.m. EST

Stocks on Wall Street continue to trade with losses Wednesday as investor enthusiasm over the previous day's historic rate cut by the

Federal Reserve

gave way to unease over lingering economic worries.

The major indices had lately eased off their morning lows. The

Dow Jones Industrial Average

was down 84 points at 8840, and the

S&P 500

fell 9 points to 903. The

Nasdaq

was giving up 15 points to 1574.

Morgan Stanley

(MS) - Get Report

helped set the tone Wednesday, posting a wider-than-expected loss for the fiscal fourth quarter ahead of the opening bell. The bank holding company said it lost $2.37 billion, or $2.34 a share. Analysts had forecast a loss of 34 cents a share.

ConAgra Foods

(CAG) - Get Report

recorded in-line second-quarter profit of $168.1 million, or 37 cents a share, which marks a 31% slump from a year ago when the maker of Chef Boyardee and other brands posted $244.8 million, or 50 cents a share.

General Mills

(GIS) - Get Report

posted second-quarter earnings of $378.2 million, or $1.09 a share, which was down from the $390.5 million, or $1.14 a share, the cereal maker recorded a year earlier.

Citing weakening demand for its hard drives,

Western Digital

(WDC) - Get Report

will cut 2,500 jobs, or about 5%, of its global workforce, as well as executive pay.

As U.S. automakers

General Motors

(GM) - Get Report

,

Ford

(F) - Get Report

and

Chrysler

continued to wait on word from the White House of an

auto-industry rescue plan

, Tokyo-based

Honda

(HMC) - Get Report

cut its profit forecast and announced a 10% pay cut for its managers.

In

analyst actions

,

Apple

(AAPL) - Get Report

was trading lower Wednesday after suffering a downgrade at Oppenheimer to perform. Apple says

Steve Jobs

will not appear at Macworld 2009, and that news again brings the CEO's health into question.

Meanwhile, the fallout from the

Bernard Madoff

scandal continues to play out. Late Tuesday,

Securities and Exchange Commission

Chairman Christopher Cox demanded an internal investigation of why regulators from his agency failed for a decade to investigate the Wall Street money manager, who last week was charged with running an elaborate and far-reaching Ponzi scheme that lost an estimated $50 billion for investors. A formal investigation of complaints would have forced Madoff to provide documentation years ago.

Oil-exporting group

OPEC

said Wednesday it will cut its production target by another 2.2 million barrels a day starting in January.

Crude oil was down 55 cents at $43.05 a barrel, while gold was rising $31 to $873.70 an ounce.

On Tuesday, the Fed cut its federal funds rate target to a range of 0% to 0.25%, a steep cut that surprised Wall Street and set a historic low for the key rate.

The 10-year Treasury was up 1 18/32 to yield 2.09%, while the 30-year note was up 2 30/32 to yield 2.62%. The dollar was mixed against other major currencies.

In Asia, Japan's Nikkei and Hong Kong's Hang Seng edged higher. In Europe, Germany's DAX and France's CAC-40 edged lower

Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. AP contributed to this report.