Updated from 4:19 p.m. ESTBlue chips and tech stocks in New York went on a wild ride Wednesday after the Federal Reserve cut rates for the second time in two weeks, rising sharply before pulling back late and closing lower. The Dow Jones Industrial Average went from down 74 points before the Fed decision to up more than 201 until sellers came in and ended the rally. At the close, the Dow was down 37.47 points, or 0.3%, to 12,442.83. The S&P 500 and the Nasdaq Composite were similarly erratic, and their initial post-Fed gains were wiped out by the time trading wrapped up. The S&P fell 6.49 points, or 0.48%, to 1355.81, and the Nasdaq lost 9.06 points, or 0.38%, to 2349. Contributing to the downturn was news that Fitch Ratings downgraded bond insurer FGIC, taking its key triple-A insurer financial strength rating down to double-A. FGIC isn't publicly traded, but competitors Ambac ( ABK) -- downgraded by Fitch earlier this month -- and MBIA ( MBI) plunged 16% and 12.6%, respectively, derailing the financial names. After initially spiking on the Fed 50-basis-point rate cut, the NYSE Financial Sector Index pulled back and was lower by 1.1%. The Nasdaq Financial 100 Index also turned negative, falling 0.6%. Several financial stocks that popped on the Fed rate cut announcement, including Citigroup ( C), JPMorgan Chase ( JPM) and Lehman Brothers ( LEH), ended the session in the red. "There was some profit-taking on concerns of bond insurer downgrades, which put pressure on financials," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "It's not surprising news. I don't think these monoline insurers will go out of business, but they're going to get pinched if they do get downgraded from their triple-A ratings." The decline in financials nearly turned market breadth to the negative side. On the New York Stock Exchange 4.34 billion shares changed hands, as advancers matched decliners. Volume on the Nasdaq reached 2.52 billion shares, with winners narrowly beating losers by an 8-to-7 margin. Word of the ratings action erased what briefly had been a sizable move upward for the market. As had been widely expected, the Federal Open Market Committee, the Fed's policymaking arm, decided to lower the fed funds target rate by 50 basis points to 3%, the lowest level since 2005. The discount rate was also cut by 50 basis points to 3.50%. In the accompanying statement, the Fed said that "financial markets remain under considerable stress, and credit has tightened further for some businesses and households." While inflation should moderate in the coming quarters, "it will be necessary to continue to monitor inflation developments carefully," the statement warned. Downside risks to the economy remain, the Fed said. The central bank has now lowered rates by 125 basis points over the past week, including an unscheduled rate decision to cut the fed funds rate by 75 basis points on Jan. 22. The Fed has now reduced interest rates by 225 basis points, or 2.25%, since its Sept. 18 meeting, in a bid to avoid a recession. "We had a good rally between the last rate cut and this one, so investors are taking money off the table," said Paul Nolte, director of investments with Hinsdale Associates. "With the Fed cutting rates by as much as they have in a small time frame, investors are wondering if they're somehow missing something that the Fed hasn't." U.S. Treasury prices tumbled following the Fed's move, pushing yields higher. The 10-year note was losing 4/32 in price, yielding 3.70%. The 30-year bond was shedding 23/32 in price to yield 4.40%. Economic data were also in focus following the Commerce Department's advance read on fourth-quarter gross domestic product. The first of three readings on quarterly GDP showed a sharp decline to 0.6% from the third quarter's 4.9% and was half of what economists anticipated. Using the data, GDP grew 2.2% last year, the slowest annual growth since 2002. Providing something of an offset and adding to the mixed data on the economy was the ADP payrolls report, which showed that employment in the private sector jumped by 130,000 in January, much greater than expected. The data come ahead of the government's own nonfarm payrolls report, which is expected to show a gain of 65,000 jobs when it is released later this week. "ADP has proved itself horribly misleading several times over the past year but the fact remains that it is the best single advance indicator of payrolls," said Shepherdson. "Accordingly, we are inclined to move up our estimate for the official headline number on Friday to 100,000 from 50,000." Investors were also shuffling through the latest earnings releases. Yahoo! ( YHOO) was a notable decliner, sliding 8.5%. After the last close, the Internet search giant posted a fourth-quarter profit that dropped 23% from a year ago. Yahoo! also offered full-year revenue guidance that disappointed shareholders, and the company also announced it will lay off as many as 1,000 workers as a cost-cutting measure. The stock was down $1.76 to close at $19.05. Ahead of the open, Swiss bank UBS ( UBS) said it expects a record quarterly loss of $11.5 billion in the fourth quarter due to exposure from U.S. subprime mortgages totaling $14 billion. UBS lost 70 cents, or 1.6%, to $42.35. Several components of the Dow were out with reports before the opening bell. Merck ( MRK) swung to a fourth-quarter loss due to charges stemming from litigation settlements over its Vioxx painkiller. Merck shed $1.54, or 3.2%, to $46.47. Meanwhile, Boeing ( BA) beat analysts' earnings target for the fourth quarter. Although the company offered 2008 revenue guidance that was below current estimates, Boeing ended higher by $1.91, or 2.4%, at $82.87. Altria ( MO), also a Dow component, traded higher after beating fourth-quarter earnings targets. The company also announced that it will spin off Philip Morris International unit on March 28. Altria rose 45 cents, or 0.6%, to $76.57. Elsewhere on the earnings docket, Kellogg ( K), UPS ( UPS) and Kraft Foods ( KFT) all reported declines in fourth-quarter earnings but matched their respective average estimate. Kellogg slid 1.2%, and Kraft lost 2.5%. UPS advanced 1.4%. Eastman Kodak ( EK) dropped 3.4% despite posting a jump in fourth-quarter earnings. Shares shed 70 cents to close at $19.75. Crude futures pared gains following a bearish weekly inventory report from the Energy Department that showed oil stocks rose by 3.6 million barrels. Oil finished up 69 cents to $92.33 a barrel. Gold futures, meanwhile, shed $4.50 to $926.30 an ounce. Overseas markets were uniformly lower. Japan's Nikkei 225 eased 1%, and Hong Kong's Hang Seng dropped 2.6%. Among European bourses, the Paris CAC 40 declined 1.2%, and London's FTSE 100 slipped 0.5%.