Rate Cut Doesn’t Calm Markets
The coordinated rate cuts by global central banks, including the Federal Reserve, did not allay investor fears that the credit markets would begin lending money and a global recession would be averted. Stocks in early trading on Wednesday continued their volatility, moving significantly up when the market first opened and then swinging wildly the other way by noon EST.
Adding to investor jitters is that the third-quarter earnings season started poorly after Alcoa Inc., the largest U.S. aluminum producer, tumbled 14 percent as a reduction in manufacturing caused by the credit crisis left the company with earnings that trailed analyst estimates. J.C. Penney Co. and Target Corp. dropped as much as 7.2 percent after same-store sales slumped in September.
The Standard & Poor's 500 Index lost 9.8 points, or 1 percent, to 986.43 at 11:09 a.m. in New York. The Dow Jones Industrial Average retreated 126.4, or 1.3 percent, to 9,320.71. The Nasdaq Composite Index decreased 0.4 percent to 1,747.8. Three stocks fell for every two that rose on the New York Stock Exchange.
Published on October 8, 2008
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