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Updated from 3:30 p.m. EDT

Stocks on Wall Street ended a muddled Wednesday with mixed results, after the

Federal Reserve

cut its target interest rate to 1%. Blue-chip stocks sold off sharply in the final minutes of trading, while technology shares held on to modest gains.


Dow Jones Industrial Average

, which rose as much as 298 points in the final hour, plummeted from that session high as the close approached, ending down 74.16 points, or 0.8%, at 8990.96. The index has yet to post two consecutive days of gains this month. The

S&P 500

lost 10.42 points, or 1.1%, to 930.09. The


gained 7.74 points, or 0.5%, to 1657.21.

Following a two-day meeting that began Tuesday, the Fed announced it had cut its key interest rate by 50 basis points to 1%, a move that had been widely expected by investors.

In its policy statement accompanying the cut, the central bank said that its board of governors had voted unanimously for the change. It said that the economy has slowed substantially and it expects inflation to moderate to levels of price stability.

Tumultuous credit markets are likely to continue to restrain spending, the Fed said. The agency also noted that recent policy action, including "extraordinary liquidity measures," should help improve credit conditions.

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"The real story regarding the Federal Reserve is its various liquidity operations; the federal funds rate is second fiddle," wrote Tony Crescenzi, chief bond market strategist at Miller Tabak, on his

blog this morning. He said that household and business debts are tied to the prime rate, which in turn is pegged to the target fed funds rate. As such, a reduction in the target rate would still have an impact, he wrote.

Dirk Van Dijk, director of research at Zacks Investment Research, said the Fed's move was expected, but some may have been disappointed that the Fed didn't cut further. He said the U.S.'s current economic environment resembles that of Japan in the 1990s, where interest rates remained near zero while the economy stagnated. However, "I'd rather have a situation like Japan in the '90s that the U.S. in the '30s," he said.

The risk involved in low interest rates, said Van Dijk, is that in the next year or year and a half, the money that is now flooding the markets suddenly takes hold and inflation skyrockets. At the same time, he said, the current situation warrants the cut.

Lending markets had shown signs of relaxing ahead of the Fed's decision. Three-month dollar Libor, a measure of the rate banks charge one another for large loans, fell 5 basis points to 3.42%. The overnight Libor rate declined 10 basis points to 1.14%.

Corporate earnings were also occupying investors' attention. Electronics manufacturer



reported a 72% decline in its quarterly profit due in part to recent sharp appreciation of the yen. Shares slipped 3.9% to $21.14.

In the telecommunications space, cable company


(CMCSA) - Get Free Report

reported rising net income. Shares tumbled 9.9% to $15.28.

Telecom services firm



posted declining revenue and earnings and said it would cut 1,200 jobs during the fourth quarter, and shares dropped 10% to $2.33.

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Oil refiner and gas station operator


(HES) - Get Free Report

posted higher quarterly earnings. The stock gained 5.2% to $53.13.

Meanwhile, glass-panel manufacturer


(GLW) - Get Free Report

reported revenue that was below expectations and reduced its fourth-quarter sales guidance.


(GRMN) - Get Free Report

, which makes navigational devices, beat estimates but cut its full-year forecast.

Corning fell 8% to $10.51, while Garmin rose 2.4% to $21.95.

As for consumer staples,

Procter & Gamble

(PG) - Get Free Report

bested analysts' profit estimates, and packaged-food firm



said its income rose year over year on a one-time gain from its disposal of the Post cereal business.

Procter & Gamble shed 3% to $61.33, and Kraft shares declined 2.2% to $28.25.

The government's Troubled Asset Relief Program remained in focus, as

The Wall Street Journal

reported that


, a finance company jointly owned by

General Motors

(GM) - Get Free Report


Cerberus Capital

, is applying for status as a bank holding company to access the Treasury Department's $700 billion capital-injection plan for banks.

For its part, GM announced Wednesday that it sold 2.1 million vehicles in the third quarter, down 11% from a year ago.

Reports on a merger discussions between GM and Chrysler also emerged during the session. Citing two people who have been briefed on the talks, the

Associated Press

reported that several issues surrounding a potential deal have been resolved. According to the report, remaining obstacles include how the companies will finance the deal. Shares ended the day up 8.2% at $6.76.

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also reported that cell-phone maker



is working to cut back its phone division and refocus on using


(GOOG) - Get Free Report

Android software for its devices. Motorola stumbled 6.5% to $5.46, and Google gave back 2.9% to $358.

In analyst actions, consumer-goods firm

Johnson & Johnson

(JNJ) - Get Free Report

caught a JPMorgan downgrade to neutral from overweight. The stock sold off 4.1% to $61.53.

Moving to economic data, the Census Bureau's read on September durable-goods orders showed a surprise 0.8% uptick, up from a 5.5% decline in August and better than the 1% drop expected by economists. Excluding transportation, new orders dropped 1.1%, and taking out defense, they edged down 0.6%.

The Energy Information Administration reported that crude-oil inventories rose by 500,000 barrels for the week ended Oct. 24, an increase that fell short of expectations.

Following the report, crude oil soared $4.77 to settle at $67.50 a barrel. Gold gained $13.50 to $754 an ounce.

Longer-dated U.S. Treasury securities were falling in price. The 10-year was down 2/32 to yield 3.84%, and the 30-year was shedding 22/32, yielding 4.23%. The dollar was falling sharply vs. its major foreign competitors.

Overseas, European exchanges were mostly rising. The FTSE in London moved higher, while the DAX in Frankfurt was edging downward. As for the

Asian exchanges

, Japan's Nikkei closed sharply higher, while Hong Kong's Hang Seng logged a modest gain.