Stocks fell sharply yesterday pushing the Dow Jones Industrial Average to a two-year low after the Federal Reserve cut interest rates by one-half a percentage point, the low end of expectations, and warned of weakness in the US economy.
Stock indexes serpentined immediately after the announcement heading lower, then higher before deep and wide sell-off took over.
It is the third 50 basis-point cut by the Fed this year, as the central bank attempts to head off a recession with lower rates, which decrease the borrowing costs of businesses and consumers.
The Dow finished with a 238.29-point loss to close at 9,720.82, a two-year low, according to the latest data, while the Nasdaq composite index dropped 93.77 points to 1,857.41.
It was the lowest close for the Dow since March 24th, 1999, and the Nasdaq closed at a low unseen since November 13th 1998.
The Standard & Poor's 500 index fell 28.19 points to 1,142.62, the lowest finish since December 14th, 1998.
The central bank slashed its key federal funds rate, charged for overnight lending between banks, by 50-basis points to 5.00 per cent from 5.50 per cent. Wall Street had been hoping the central bank would cut rates by as much as 75 basis points.
