Dow Finishes Unchanged as Rate Cuts Pend
Blue chip stocks closed little changed today, waiting in vain for major banks to lower their prime rates.
The Dow Jones industrial average closed unchanged at 2,626.73.
The broader market was slightly more upbeat. Gaining stocks on the New York Stock Exchange outnumbered losers by about 5 to 4. Big Board volume was 180.38 million shares.
Wall Street had soared in the previous session after the Fed forcefully tried to stimulate the weak economy by cutting its key discount lending rate to 6.5% from 7%.
But the heady mood wore off and analysts said investors were waiting for news of lower prime rates following the Fed’s decision.
Longstanding concerns about the economy, the Persian Gulf crisis and oil prices resurfaced, they said.
Major banks are expected to step in and cut their prime lending rates to their best business customers, spurring lending.
“Prime rate cuts will come later in the week,” said Harry Laubscher, a market analyst at Tucker Anthony. “The big New York banks will probably do it tomorrow or Friday.”
Some investors were taking profits, while others “were putting money to work because of the promise of lower interest rates,” one trader said, accounting for the market’s mixed tone.