The Federal Reserve's emergency rate cut on Tuesday drew a mixed response on Wall Street, though the move increased the odds of more reductions, including a possible half-point cut at next week's regular policy meeting.
The Fed on slashed a key interest rate by a hefty three-quarters of a percentage point, the biggest cut in more than 23 years, after a two-day global stocks rout sparked by fears of a U.S. recession.
The move, a rare one made between the U.S. central bank's regularly scheduled meetings, took the federal funds rate governing overnight lending between banks down to 3.5 percent, its lowest level since September 2005. The Fed also lowered the discount rate it charges on direct loans to banks to 4 percent.
"The Fed is very, very, very worried," said John Tierney, an analyst at Deutsche Bank in New York.
The Fed's bold bid failed to instill confidence in shaken financial markets as U.S. stocks, playing catch-up with sell-offs around the world, fell sharply at the open. But stocks trimmed most of their losses to close with relatively minor declines.
Prices for U.S. government bonds slipped, while the dollar fell sharply against the euro.Page 1 of 4 | Next Page