KinjaKahn
01-22-2008, 09:48 AM
Fed Cuts Interest Rates as World Markets Plunge
Interest Rate Cut .75 Points to 3.5 Percent; U.S. Stocks Still Expected to Fall
By SCOTT MAYEROWITZ
ABC NEWS Business Unit
Jan. 22, 2008
The Federal Reserve took dramatic action this morning, cutting interest rates .75 percentage points. The unplanned cut came after two days of massive losses in stock markets around the world but was not enough to prevent Wall Street from opening today to a dismal start.
The key Fed Funds interest rate now stands at 3.5 percent.
The move comes after stock markets from Japan and China to Germany and England saw some of the steepest one-day slides in decades upon fears that America's economy is collapsing.
Investors around the world signaled a lack in confidence in President Bush's ability to pull the American economy away from recession. The expectation is if America's economy falters, the effects will be felt around the globe.
"If the U.S. market slows down or goes into a recession, the rest of the world is going to feel the pinch, too," said Mellody Hobson, president of Ariel Capital Management and a "Good Morning America" financial contributor. "A sneeze in the United States can cause a flu around the rest of the globe."
U.S. stock markets were closed yesterday in observance of Martin Luther King Jr. Day. The Federal Reserve's unexpected cut did not help the markets. Stock futures spiked after the Fed's announcement but then quickly fell down close to their previous lows.
The Dow Jones Industrial Average opened down more than 440 points, more than 3.5 percent lower than Friday's close. The NASDAQ opened down 110 points, or 4.6 percent.
The Federal Reserve has long been scheduled to meet today and Wednesday of next week to vote on whether to cut rates. All eyes on Wall Street are now looking toward that meeting to see whether the central bank, under the leadership of Ben Bernanke, will cut rates yet again.
Bush and Congress
Friday, Bush called for a $140 billion economic stimulus package to help give the sagging U.S. economy a "shot in the arm." The White House is urging congressional Democrats and Republicans to issue tax rebates of up to $800 for individuals and $1,600 for married couples as well as tax breaks for businesses.
When stock markets opened in Asia Monday, it became clear quickly that investors there were not satisfied that the president's plan would work. A few hours later, Europeans followed with their own dramatic drops.
Breaking News (http://abcnews.go.com/Business/MarketTalk/story?id=4169738&page=1)
Interest Rate Cut .75 Points to 3.5 Percent; U.S. Stocks Still Expected to Fall
By SCOTT MAYEROWITZ
ABC NEWS Business Unit
Jan. 22, 2008
The Federal Reserve took dramatic action this morning, cutting interest rates .75 percentage points. The unplanned cut came after two days of massive losses in stock markets around the world but was not enough to prevent Wall Street from opening today to a dismal start.
The key Fed Funds interest rate now stands at 3.5 percent.
The move comes after stock markets from Japan and China to Germany and England saw some of the steepest one-day slides in decades upon fears that America's economy is collapsing.
Investors around the world signaled a lack in confidence in President Bush's ability to pull the American economy away from recession. The expectation is if America's economy falters, the effects will be felt around the globe.
"If the U.S. market slows down or goes into a recession, the rest of the world is going to feel the pinch, too," said Mellody Hobson, president of Ariel Capital Management and a "Good Morning America" financial contributor. "A sneeze in the United States can cause a flu around the rest of the globe."
U.S. stock markets were closed yesterday in observance of Martin Luther King Jr. Day. The Federal Reserve's unexpected cut did not help the markets. Stock futures spiked after the Fed's announcement but then quickly fell down close to their previous lows.
The Dow Jones Industrial Average opened down more than 440 points, more than 3.5 percent lower than Friday's close. The NASDAQ opened down 110 points, or 4.6 percent.
The Federal Reserve has long been scheduled to meet today and Wednesday of next week to vote on whether to cut rates. All eyes on Wall Street are now looking toward that meeting to see whether the central bank, under the leadership of Ben Bernanke, will cut rates yet again.
Bush and Congress
Friday, Bush called for a $140 billion economic stimulus package to help give the sagging U.S. economy a "shot in the arm." The White House is urging congressional Democrats and Republicans to issue tax rebates of up to $800 for individuals and $1,600 for married couples as well as tax breaks for businesses.
When stock markets opened in Asia Monday, it became clear quickly that investors there were not satisfied that the president's plan would work. A few hours later, Europeans followed with their own dramatic drops.
Breaking News (http://abcnews.go.com/Business/MarketTalk/story?id=4169738&page=1)