Despite rate cuts, stocks fall -- but (relatively) modestly
This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.
The world’s central banks tried to jump-start investors’ confidence today with coordinated interest rate cuts.
On Wall Street, it looked like the move was doing the trick late in the day -- until the final 30 minutes of trading.
The Dow Jones industrials had been up as much as 150 points going into the final half hour, then abruptly gave it all up and closed down 189.01 points, or 2%, to 9,258.10. Broader indexes also lost between 1% and 2%. It was the market’s sixth straight loss, and left the Dow off 34.6% from its record high reached a year ago this week.
Still, the action today was dramatically improved from the previous two sessions. The Dow was off 370 points Monday and 508 points Tuesday.
And Wall Street fared much better than Europe, where most market indexes plunged between 5% and 7% today despite the rate cut announcement.
On the New York Stock Exchange, 749 stocks rose and 2,457 fell. That’s lousy, except when compared with Tuesday’s sell-off, when just 387 issues rose while 2,879 fell. On Monday, a mere 248 stocks were up.
Some stocks today sparked genuine enthusiasm: Agricultural products giant Monsanto Co. reported a fiscal fourth-quarter loss, which was expected (it’s a seasonal issue). But the company said it expected fiscal 2009 earnings to be up 15% to 20% and that its farmer customers weren’t reporting trouble getting credit.
Monsanto’s shares surged $7.26, or 9.8%, to $81.44.
Among blue chips, battered General Electric Co. sank as low as $19.90 but finished at $20.65, up 35 cents. The overnight rate the company was offering on commercial paper was 1.25%, down from 1.90% on Tuesday, Bloomberg News reported. That hinted at some improvement in the credit markets.
But other key short-term rates continued to climb, despite the central banks’ rate cuts. The three-month dollar Libor loan rate (short for London interbank offered rate) rose to 4.52% from 4.32% on Tuesday.
If there’s to be a noticeable turn in confidence, ‘We’ll see it first in the credit markets and then in the equity markets,’ said Marshall Front, chairman of money manager Front Barnett Associates in Chicago.
One other encouraging signal from the credit side: Massachusetts was able to sell $750 million in short-term tax-free notes today, a sign that investors were returning to the municipal debt market. That could bode well for California, which plans to tap the muni market for $4 billion in short-term funding next week.