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US stocks mixed after Fed's aggressive rates cut

(Agencies)
Updated: 2008-10-30 09:53

Traders wait for television monitors to display that the Federal Reserve has slashed a key interest rate by half a percentage point on the floor of the New York Stock Exchange October 29, 2008. [Agencies]

Policymakers spelled out a weakening of economic conditions in the U.S. and abroad, citing first a drop in spending by American consumers. The Fed also reiterated that it expects government steps, including its own efforts to increase liquidity, to improve credit market conditions and the economy over time.

Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, said the Fed's overall tone conveyed it regards the economic troubles as somewhat typical of a weak economy and not the kind of intractable problems that signal a deep recession is imminent.

"They more or less indicated elevated concerns about the economy but nothing in it suggests any real panic but that this is just one more step in their program to restore the financial system to complete functioning."

But the final hour of trading on Wall Street over the past month has seen turnarounds in sentiment as well as prices, and the late-session volatility that has become the norm was in force again Wednesday.

"We set ourselves up in the last hour with a golden opportunity to lock in profits," said Ryan Larson, senior equity trader at Voyageur Asset Management, a subsidiary of RBC Dain Rauscher.

He said that very late in the day, more investors were putting a somewhat downbeat spin on the Fed's statement, which Larson said indicated policymakers are willing to lower the fed funds rate below 1 percent if necessary. Traders started thinking, "if they're willing to go under 1 percent, there must be serious problems that we don't know about yet," he said.

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