The curtain closed on yet another disappointing day on Wall Street, and even a historic effort by central banks around the globe to cut interest rates could not halt the wave of selling slamming stocks this week.
The markets extended one of their longest losing streaks in recent memory as Wall Street worries the latest emergency action from the Federal Reserve won't be enough to stave off a global recession.
Today's Market
The Dow Jones Industrial Average slid 189.01 points, or 2.00%, to 9258.10. The broader S&P 500 Index lost 11.29 points, or 1.13%, to 984.94 while the Nasdaq Composite dropped 14.55 points, or 0.83%. to 1740.33. The consumer-friendly FOX 50 fell 10.84 points, or 1.44%, to 739.70.
It would be an understatement to say Wednesday's trading session was turbulent. Wall Street had a schizophrenic reaction to the global rate cuts as markets swung wildly between sharp rallies and even sharper selloffs, ultimately ending on the downside.
The Dow has plummeted more than 1600 points over the past week, leading some to wonder when the selling will cease. The S&P 500's five-day percentage losses coming into Wednesday were the steepest since the crash of 1987.
“It’s become a panic…But that tends to be [part of] the process of making a bottom,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald.
Aluminum maker Alcoa (AA) led the way down on the Dow Wednesday, plunging as much as 20% on its weaker-than-expected quarterly results. GeneralMotors (GM) and Bank of America (BAC) didn't fare much better. On the other hand, Intel (INTC) and General Electric (GE) closed more than 1% higher to lead the index's percentage gainers.
The Nasdaq Composite managed more modest losses than the broader market, with BlackBerry maker Research in Motion (RIMM) and eBay (EBAY) rebounding solidly.
All eyes were on the Fed move as the markets largely ignored a better-than-expected report on pending home sales and a bearish oil inventory report.
Historic Central Bank Coordination
In an unprecedented move to save the U.S. from its worst financial crisis since the Great Depression, the Federal Reserve and fellow central banks lowered interest rates Wednesday morning.
The Fed voted unanimously in favor of cutting the nation's primary interest rate by 0.5% to 1.50%, reversing its summer-long strategy of holding rates steady on fears of inflation.The central banks said the intra-meeting move was needed because of "the recent intensification of the financial crisis."
That "intensification" has included the demise of storied Wall Street investment banks, some of the worst banking failures in U.S. history and credit markets that have all but frozen.
In addition to the Bank of England and the European Central Bank, the Federal Reserve was joined in the rate cut reduction by China, Canada, Sweden and Switzerland.
Markets initially rallied on the news but then turned sharply negative, in part on the realization the rate cuts won't turn the economy around overnight.
“Even though the rate cut had a euphoric effect, we still have to deal with so much more. There isn’t a set in stone solution. It’s a work in progress," said Stephen Carl, head trader at Williams Capital.
The early declines led some to hope for a capitulation moment that never came.
“Maybe this is the purge… Let's get it over with," said Frank Davis, director of sales and trading at LEKSecurities. “We’ve got fear selling going on. It's hard to control logic when you have fear selling.”
