The Hindu : Business : Wall street plunges at open

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Wednesday, Jan 23, 2008
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Wall street plunges at open

Federal Reserve fails to assuage investors

NEW YORK: Wall Street plunged at the opening of trading on Tuesday, propelling the Dow Jones industrials down more than 300 points after an interest rate cut by the Federal Reserve failed to assuage investors fearing a recession in the U.S..

U.S. markets joined stock exchanges around the globe that have fallen precipitously in recent days amid concerns that a downturn might spread around the world. Treasury bonds were mixed, with investors seeking safer investments as stocks plummeted. The price of oil, meanwhile, fell amid expectations that a downturn would depress demand for energy.

The Fed’s decision to cut its federal funds rate to 3.50 per cent and the discount rate, the interest it charges to lend directly to banks, came a week before the central bank’s regularly scheduled meeting, a sign that the Fed recognised the seriousness of the world financial situation. But there were already fears in the markets before the Fed move that an interest rate cut wouldn’t be enough to prevent a recession.

In the first hour of trading, the Dow was down 311.99, or 2.58 per cent, at 11787.31. The Dow was last below 12000 in March 2007.

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