Skip navigation
Markets Video Gallery
Euro zone October inflation was confirmed at -0.1% year-on-year Monday, in line with forecasts. “There is not an inflati...
Telecoms equipment maker Alcatel-Lucent is betting on growth in the Asia-Pacific region as part of its plan to return to...
The CEO of Abu Dhabi carrier Etihad Airways, James Hogan, told CNBC that advance ticket sales for the first quarter of n...
A big part of China's economic growth is due to government investment and stimulus packages, Wilfred Sit from Mirae Asse...
Platinum prices could rise 2.5% next year, according to Lonmin, the world's third-largest producer of the metal. Lonmin ...
Watchlist Sponsored By :


Current DateTime: 03:40:39 16 Nov 2009
LinksList Documentid: 33482595

Current DateTime: 03:40:40 16 Nov 2009
LinksList Documentid: 24355697

FEATURED QUIZZES


Current DateTime: 03:40:40 16 Nov 2009
LinksList Documentid: 33793611
  • The Billionaire BFF's

      Philanthropists. Bridge partners. Hockey players. Which responses are based on facts from Buffett's and Gates' real lives?

  • The Many Myths of Coca-Cola

      Can you tell which statements are true, and which ones are just rumors?

  • Think You Understand Markets?

      We've selected some questions from the Financial Industry Regulatory Authority's test of investor knowledge. See how you do ...


Current DateTime: 03:40:40 16 Nov 2009
LinksList Documentid: 24890560
  • Winterizing Your Portfolio

      If 2009 was the winter of our discontent, will 2010 be a winter wonderland for investors? A lot depends on the recovery—or lack thereof.

  • Investor's Guide to Real Estate

      Some even say the long-awaited recovery is here. Regardless, buyers and sellers alike can profit from our guide.

  • Alternative Investing

      Stocks and bonds? Sure. But it's a big world out there for investors.

powered by digg
Fed's Rate Cut Limits Selloff by Stocks
By: Jeff Cox, , Special to CNBC.com | 22 Jan 2008 | 05:29 PM ET
Text Size

A surprise Fed rate cut helped hold back a massive selloff in the stock market, although stocks closed lower on continued worries about the US economy.

Major indexes pared steep early losses as financials and retail showed surprising strength. Still, the broader market remained volatile as recession fears continued to weigh on stocks despite the Fed move and a promised economic stimulus by the White House and Congress.

Major U.S. Indexes
Loading...
Loading...
Loading...

Expectations that a recession would become reality hit their all-time high Tuesday on the Intratrade predictions market, with the chances at 77.5 percent.

Those fears prevailed even after the Federal Reserve cut the fed funds rate to 3.5 percent, down 75 basis points as the central bank looked to rescue markets from plunging into the first bear market since October 2002.

"The Fed has certainly caught up in one fell swoop to where they should have been all along," said Mike Burnick, director of research at the Sovereign Society. "We're getting a bounce, which is not unusual at this point."

Trading was volatile, with the CBOE's Volatility Index [VIX  Loading...      ()   ], which is considered a strong gauge of market fear, soaring.

Investors flocked to safe-haven bonds and oil fell well off its recent high above $100 a barrel. ExxonMobil [XOM  Loading...      ()   ] was one of the biggest Dow drags.

But retail posted a strong move upward, with Home Depot [HD  Loading...      ()   ] leading Dow gainers. Retail overall was up more than 4 percent for the day, boosted also by Bon-Ton [BONT  Loading...      ()   ] and Sears Holding [SHLD  Loading...      ()   ].

Market expectations were for a short-term rally that could still fizzle as the credit collapse winds its way through the broader market, and investors continued to question Fed Chairman Ben Bernanke's leadership.

"You're talking about the underlying implosion of the credit class which can't be fixed with a few rate cuts," said Tony Sagami, technology and Asia analyst at MoneyandMarkets.com. "Gentle Ben (Bernanke) will do everything he can to prop up asset prices. We still haven't seen the White House stimulus plan yet, and it should be very aggressive. You're going to get a nice bounce."

Financials Hang Tough

Financials surged into positive territory, as Bank of America [BAC  Loading...      ()   ] and Wachovia [WB  Loading...      ()   ] both missed analyst estimates yet saw shares gain.

Other financial giants also were doing well and regional banks were among the biggest winners of the day, with KeyCorp [KEY  Loading...      ()   ] leading the way after posting strong quarterly earnings.

Battered bond insurers MBIA [MBI  Loading...      ()   ] and Ambak [ABK  Loading...      ()   ] skyrocketed after the latter said it had a higher asset value than Wall Street believes.

Home builders also posted a nice rebound, with shares up sharply at Hovnanian [HOV  Loading...      ()   ] and most others in the industry.

The tech-laden Nasdaq paced the losers throughout the day, with Microsoft [MSFT  Loading...      ()   ] leading the index down after the company announced a partnership with Citrix Systems [CTXS  Loading...      ()   ] to create new virtualization products.

Amid the frantic early selling, which saw the Dow fall nearly 500 points, analysts advised investors not to panic as many did during Black Monday on Oct. 19, 1987.

There was even belief that the heavy selling Tuesday could ease enough so as to register a modest gain by the end of the trading day, or at least set the stage for a rally later in the week. A scenario in which indexes would gain before close became increasingly unlikely as skepticism persisted over the effectiveness of the rate cut and stimulus plan.

"We have a highly increased chance that we've seen a selling climax and an oversold bounce," Burnick said. "It wouldn't surprise me to see the markets get into positive territory today or have a rally attempt later this week."

Procter & Gamble [PG  Loading...      ()   ], the world's largest household products company, fell sharply, while Apple [AAPL  Loading...      ()   ] and chipmarker Intel [INTC  Loading...      ()   ] also were among the biggest losers on the Nasdaq.

Market breadth was negative, with decliners beating advancers 2 to 1.

© 2009 CNBC.com
Tools:
Print EmailAdd This share icon
  • digg share

CNBC HIGHLIGHTS

  • Warren Buffett and Bill Gates spoke to Columbia students, and Buffett made the students a startling offer.
  • Brian L. Roberts
  • For the chief of cable company Comcast, growth has been about making deals – generally very large deals.
  • Some companies may start using insurance to shift carbon risk from their balance sheets to maybe... yours?
  • The president and founder of Genesis Today wants to improve America’s health, and thinks Wal-Mart can help.
  • Switzerland's privacy watchdog is taking legal action to force Google to make changes to its Street View service.
ADD COMMENTS
Remaining characters


Current DateTime: 01:58:02 16 Nov 2009
LinksList Documentid: 29778428

Current DateTime: 01:58:02 16 Nov 2009
LinksList Documentid: 29779196

Current DateTime: 01:58:02 16 Nov 2009
LinksList Documentid: 29779199

Current DateTime: 01:58:02 16 Nov 2009
LinksList Documentid: 29779198
  Data is a real-time snapshot  *Data is delayed at least 15 minutes
Global Business and Financial News, Stock Quotes, and Market Data and Analysis

© 2009 CNBC, Inc.  All Rights Reserved.
A Division of NBC Universal
Thomson ReutersThomson Reuters