Wall Street gave up sharp gains and closed lower Wednesday after the Federal Reserve cut interest rates a quarter-point. The Dow Jones industrial...
NEW YORK — Wall Street gave up sharp gains and closed lower Wednesday after the Federal Reserve cut interest rates a quarter-point.
The Dow Jones industrial average fell 11.81 to 12,820.13, after trading up 178 points shortly after the Fed’s announcement.
Microsoft, one of the 30 Dow stocks, slid 12 cents to close at $28.52 a share. Boeing, also a Dow stock, sank 67 cents to $84.86.
Broader stock indicators also closed down, having given up steep gains. The Standard & Poor’s 500 index fell 5.35 to 1,385.59, and the Nasdaq composite index fell 13.30 to 2,412.80.
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The stock market had rallied in the hours before the Fed decision thanks to stronger-than-anticipated economic and corporate reports — a weeks-long trend that has helped the three major indexes post their first monthly gain after five straight months of losses.
“The market had wanted to hear tougher talk (from the Fed) on inflation, and some sort of talk that the easing has been adequate for a while, for the foreseeable future,” said Scott Wren, equity strategist for Wachovia Securities.
With economic data in recent weeks coming in anemic but not as bad as expected, inflation has appeared to Wall Street to be the growing threat, due to rising food prices, crude oil near $120 a barrel and U.S. roadside gasoline prices surging above $3.60 a gallon.
Another report that beat lowered expectations came from General Motors, whose quarterly loss of $3.3 billion due to supplier strike and weak U.S. sales was milder than Wall Street predicted. Shares of the Dow component jumped $2, or 9.4 percent, to $23.20.
Procter & Gamble, another Dow component, said price increases and cost controls helped offset higher commodity costs, pushing its third quarter profit up 8 percent. P&G lifted its full-year outlook, and its shares rose $1.15 to $67.05.
But the technology sector got extra downward pressure after software maker SAP said its profit slipped in the first quarter because of the weaker dollar and its takeover of another software company, Business Objects. Though sales were higher and SAP raised its 2008 outlook, shares fell $2.22, or 4.2 percent, to $50.23.
The Dow climbed 4.5 percent for the month of April; the S&P rose 4.8 percent; and the Nasdaq jumped 5.9 percent. The Dow remains down 3.4 percent for the year, however, while the S&P is down 5.6 percent for the year and the Nasdaq is down 9 percent.