Dow Jones Closes Down 128 Points

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At times it looked like Wall Street would have the worst day in years, but it ended up only being a bad day. With the Fed cutting interest rates by 75 basis points, and the general pessimistic news in the global equities markets, things could have been much worse.

The Dow Jones industrial average, down 465 points shortly after trading began, bounced around throughout the session before closing with a milder drop of 128.11, or 1.06 percent, at 11,971.19, according to preliminary calculations.

U.S. stocks began the day following the lead of markets abroad that had plummeted for two straight days, and also extended their own steep losses from last week. Fears of a U.S. recession — one that would spread to other economies — had investors fleeing stocks worldwide.

The Fed, in a step anticipated by many traders, moved before the opening of trading, cutting its benchmark federal funds rate by 0.75 percentage point to 3.50 percent and the discount rate, the interest the Fed charges banks directly, to 4 percent. What was unusual was the reduction’s coming between regularly scheduled meetings of the central bank’s policy-making Open Markets Committee; the next gathering is a week away.

The interest rate cut seemed to calm the market a bit, but no one expects it to last long. Right now sentiment is down, and shares of stocks are expected to drop further.

The stock market is almost always comprised of investors who expect consumers to carry the load for the U.S. economy. If they can’t shoulder the load anymore, you can understand why sentiments are so negative.

Tomorrow promises more of the same, mainly volatility and uncertainty.

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