Wall Street jitters continued at midday after the market opened with a 465-point dive, then began recovering most of that loss in the wake of an emergency rate cut by the feds from 4.25% to 3.5%--a cut deeper than any since 1984, according to U.S. News & World Report.
"The tepid reaction of investors to the surprise cut may be due to a sense that the Fed senses the economy is in worse shape than it originally thought," according to USA Today. Imagine that: years of happy talk, denial, deregulation and creating one’s own reality ultimately have consequences. Who’d have thought?
Washington Post business columnist Steven Pearlstein is reporting on the current flavor of trader grousing:
Moreover, in yesterday's stampede out of stocks, investors sought refuge in the safety of government bonds, which had the effect of driving down interest rates. A rate cut merely confirms what the markets have already concluded while quieting criticism that the central banks have been "behind the curve."
True to form, some Wall Street traders complained this morning that the Fed move was too little, too late. But clearly the bigger disappointment was that the Fed was not joined by either the Bank of Japan or the European Central Bank in a coordinated move to ease credit conditions that would have acknowledged the increasing interdependence of global economies and financial markets. Both central banks are now likely to come under increasing political pressure at home to respond to the market meltdown and gathering recession threat.
In a parallel downer to today’s wild ride, Business Week examines the "tapped-out" average American and how that’s "spooking the Street" in an article that opens with the gloomy lede, "It's official. The subprime flu has finally spread to the U.S. consumer."
And since I’m as non-prescient as the rest of you--and apparently as most of Wall Street--I won’t pretend to prognosticate on how the day or week will end with the market. U.S. News & World Report, however, has a wrap-up of reactions from experts posted a couple of hours ago.