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Wednesday, Sep. 30, 1998
Dow drops as Fed's rate cut disappoints
Quarter-point reduction in key lending rate considered too little in view of global crises
By BRUCE MEYERSON
Associated PressNEW YORK -- Blue-chip stocks turned mixed Tuesday, pulling back from early gains, as the Federal Reserve opted for a go-slow approach in fighting the global economic crisis with lower interest rates.
The Dow Jones industrial average, which was up about 15 points as Fed policy-makers concluded their latest strategy meeting at midafternoon, finished 28.32 lower at 8,080.52 after sliding as much as 93.21 points.
Broader stock indicators finished mixed after the central bank announced that it was lowering one of its key lending rates by a quarter-percentage point, the first reduction in nearly three years.
``There were some players who were betting on a bigger cut, and they expressed their disappointment in the first few minutes,'' said Charles G. Crane, chief market strategist for Cleveland-based Key Asset Management.
``But if one steps back from the fray for a moment, one sees a stock market that is reasonably valued with interest rates where they are, even if there's anticipation that earnings will be weak next year,'' said Crane. He said that even with this month's 700-point rebound, the Dow still is more than 1,250 points, or 13.5 percent, below the July 17 peak of 9,337.97.
On Monday, the Dow gained 80 points, but the broad market struggled amid worries over whether a small cut in lending rates would stimulate enough economic activity to deal with the financial crises in Asia and Russia.
Many observers say it will take a sharper cut in Fed rates to provide both the economic and psychological boost needed to bolster the domestic economy and stabilize the global backdrop.
The Conference Board, a private research group, reported Tuesday that its measure of consumer confidence fell for the third straight month in September, suffering the biggest drop since January.
The board that its index of consumer confidence fell 7.1 points to 126 in September from a revised 133.1 in August. The index is down 12.2 points from its 29-year high in June.
September's decline, which was larger than Wall Street analysts had expected and the biggest monthly drop since January, brings the index to its lowest level since October 1997.
Declining issues barely outnumbered advancers on the New York Stock Exchange, where composite volume totaled 892.78 million shares, up from 816.24 million on Monday.
The NYSE composite index rose 0.25 to 518.28, and the American Stock Exchange composite index fell 0.22 to 628.35.
The Russell 2000 index of smaller companies fell 2.21 to 365.80.
Overseas, Tokyo's Nikkei stock average fell 0.6 percent, Frankfurt's DAX index fell 1.6 percent and London's FT-SE 100 rose 0.3 percent.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web