Wall Street Sink after Fed’s Meeting

December 12, 2007

On Tuesday Wall Street sink more than 300 points after the Fed decide to cut its benchmark interest rate by 0.25%, unsatisfied some stock investors who expect the central bank would take more belligerent actions.

After the flat opening on Dow Jones and remained quite for most of the trading session before the Fed interest rate cut decision, fell 300 points. Most of the stock market investors were anticipating at least there could be 0.50% basis cut in interest but with the 0.25% interest cut by the Fed leads the stock investors for profit booking and this made the Dow Jones to plunge more than 300 points, although Fed as expected also cut the discount rate, the rate it charges to lend directly to banks, by a quarter-point to 4.75 percent.

It is also having said that Fed signaled that further cuts are quite possible if a severe downturn in housing and crisis in mortgage lending worsen. Before the Fed decision the market was in descent mode and made and strong bounce-back after strongly tumbling below to 13K mark on Dow Jones.

The Dow fell 294.26, or 2.14 %, to 13,432.77 after dropping as much as 313.29. Strong fall was also seen on broader indexes. The Standard & Poor's 500 index fell 38.31, or 2.53%, to 1,477.65, and the Nasdaq composite index fell 66.60, or 2.45%, to 2,652.35.