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Wall Street ends lower as Fed optimism fades

Wall Street ends lower as Fed optimism fades
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First Published: Thu, Dec 18 2008. 08 32 AM IST
Updated: Thu, Dec 18 2008. 08 32 AM IST
New York: US stocks fell on Wednesday as the government’s effort to stave off a deep economic recession raised worries about mounting public debts and blunted optimism following the Fed’s rate cut.
As investors continued to digest whether the Fed had any more ammunition left after its bold move on Tuesday to slash borrowing costs to a record low, even zero, while it pledged to use “all available tools” to jumpstart the US economy.
“I think there is a worry about the huge amounts of debt and liquidity that is being placed in the system and that ultimately inflation will come up, “said Robert Francello, head of equity trading for Apex Capital hedge fund in San Francisco.
Energy stocks were the top drags on the Dow, after oil prices fell briefly below $40 a barrel for the first time since July 2004. Exxon Mobil fell 1.2% to $82.01, while Chevron Corp edged down 1% to $78.07.
The Dow Jones industrial average shed 99.80 points, or 1.12%, to 8,824.34. The Standard & Poor’s 500 Index fell 8.76 points, or 0.96%, to 904.42. The Nasdaq Composite Index fell 10.58 points, or 0.67%, to 1,579.31.
Weighing on the Nasdaq, Apple Inc slid over 6% after the company said that Chief Executive Steve Jobs would not be giving the keynote address at the Macworld trade show, renewing concerns about his health.
The stock was subsequently downgraded and had its price target removed by Oppenheimer.
Meanwhile, financial stocks were unable to sustain their gains despite an analyst note that said poor results from Morgan Stanley were not likely to be repeated. The call helped lift shares of the investment bank by 2.3%, reversing an earlier decline after the bank reported a loss.
US crude oil futures declined despite a decision by Opec to make its deepest output cut ever, 2.2 million barrels a day, but dealers said even that may fail to offset slumping world energy demand.
Retailers were a bright spot, as Macy’s Inc helped lift the sector, surging 18% to $10.01 after it said it obtained substantially more liquidity from its banks. The S&P Retail Index gained 1.81%.
The S&P Financials Index finished lower, down 1.25%, despite comments from Dick Bove, a widely-followed bank analyst with Ladenburg Thalmann, who raised his price target and profit view on Morgan Stanley, saying that it seems likely some of the write-down will be reversed.
Volume was low on the New York Stock Exchange, with about 1.33 billion shares changing hands, below last year’s estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.12 billion shares traded, below last year’s daily average of 2.17 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 3 to 2, while on the Nasdaq, the ratio was roughly even.
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First Published: Thu, Dec 18 2008. 08 32 AM IST
More Topics: Markets | US | Stocks | Dow Jones | S&P |