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Shocker: Dow Drops, Then Gains Most Back

From an ever hopeful Associated Press:

Specialist Gregg Maloney, right, directs trading at his post ...

Dow drops 465 then gains most of it back

By MADLEN READ, AP Business Writer

NEW YORK – Wall Street struggled to steady itself Tuesday, climbing back from an early plunge after the Federal Reserve cut interest rates in hopes of restoring stability to a faltering U.S. economy. The Dow Jones industrials, down 465 points at the start of the session, recovered to a loss of about 175 points.

The U.S. markets joined a global selloff amid growing fears that a recession in the United States could send economies around the world into a downturn

Analysts saw little, if any, optimism driving the market, particularly since Tuesday’s drop followed months of losses on Wall Street.

Sometimes market bottoms are not made by specific events, but by exhaustion,” said Peter Boockvar, equity strategist at Miller Tabak.

Stocks have plunged, with frequent triple-digit drops in the Dow, as investors took in a stream of weak economic data and reports that financial firms had lost billions of dollars due to the housing and mortgage crisis. With the housing and credit markets unlikely to turn around soon, and more disappointing economic news expected, investors were likely to keep shying away from stocks

It can take months for an interest rate cut to work its way through the economy. In the short term, it makes borrowing cheaper, but the billions of dollars in failed mortgages over the past year have made lenders wary of writing loans to almost anyone — consumers or corporations. And the heavy losses that banks and other financial institutions have suffered have raised questions about their stability.

Some analysts were waiting to see what else the Fed would do.

It’s just not enough yet. The Fed has got to do a lot more than just lower rates. They’ve got to inject more liquidity,” said Harry Clark, president of Clark Capital Management in Philadelphia…

The media just can’t stand it.

They want their recession. They need their recession.

And by God they will have their recession.

This article was posted by Steve on Tuesday, January 22nd, 2008. Comments are currently closed.

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