As posted by: Wall Street JournalAfter the previous session's party, the stock market suffered a hangover Wednesday, hobbled by disappointing results from Morgan Stanley and second thoughts by investors who initially hailed the Federal Reserve's interest-rate cut.
Late morning, the Dow Jones Industrial Average was down 78.61 points, or 0.9%, at 8845.53. The Standard & Poor's 500-stock index was off 1% at 904.27. The Nasdaq Composite Index fell 1% to 1573.99.
Morgan Stanley edged lower after the bank posted a fourth-quarter net loss. Rival Goldman Sachs Group on Tuesday posted its first quarterly loss since its IPO nearly a decade ago, but its shares were lifted amid a broader market rally. Early Wednesday Goldman was up 3.8%.
Stocks soared Tuesday after the Fed said it would target a range for the fed-funds rate of between 0% and 0.25% and would consider other steps to combat the financial crisis. But caution returned to Wall Street Wednesday, with some investors seeing the Fed's move as a symptom of how dire the global financial situation remains.
Consumer-products maker Newell Rubbermaid pared its fourth-quarter forecast and said that it would cut 8% to 10% of its salaried work force. Digital-storage company Western Digital cut its expectations for revenue in the current quarter and unveiled plans to cut 5% of its total work force. Newell Rubbermaid fell nearly 28%; Western Digital rose 1.2%, after falling earlier.
Oil prices were down 27 cents at $43.33 a barrel at 11 a.m. in New York as investors awaited official confirmation that the Organization of Petroleum Exporting Countries had decided at its meeting in Algeria to cut output by two million barrels a day.
Stocks fell overall Wednesday in a choppy session, with banks under pressure and a dose of grim economic news sending jitters throughout London.
The Dow Jones Stoxx 600 Index was down 0.8% to 197.51. The U.K.'s FTSE 100 Index rose 0.4% to 4324.19, while France's CAC-40 Index fell 0.3% to 3241.92. Germany's DAX Index declined 0.5% to 4708.38.
The bank sector was notably the worst performer, pressured by BNP Paribas, which dropped 17%. It reported a pretax loss of €710 million in its corporate and investment-banking division for the first 11 months of this year, confounding hopes it had escaped the worst of the financial crisis.
