Business Highlights

 

Fed cuts key rate by a quarter-point

WASHINGTON (AP) — The Federal Reserve cut a key interest rate by a quarter-point Wednesday, a smaller move than the aggressive easing it undertook earlier this year. There were signs the Fed may believe it has done enough to prevent a deep recession.

The Fed action, after a two-day meeting, pushed the federal funds rate down to 2 percent, the lowest level since late 2004. It marked the seventh rate cut by the central bank since it began easing credit conditions last September to combat the growing threat of a recession brought on by a severe housing slump and credit crisis.

Commercial banks immediately announced that they were cutting their prime lending rate to 5 percent. That will mean cheaper credit for the millions of business and consumer loans tied to the prime.

The Fed move, which was in line with expectations, sent the Dow Jones industrial average momentarily soaring above 13,000 for the first time since January.

But the Dow quickly gave up those gains as traders began to wonder whether the Fed was closing the door to further rate cuts.

 

Stocks dip with investors flummoxed over Fed

NEW YORK (AP) — Wall Street gave up sharp gains and closed lower Wednesday after the Federal Reserve cut interest rates by a quarter point but left investors guessing about the central bank’s next move. The Dow Jones industrial average, momentarily soaring above 13,000 for the first time since early January, ended the session with a modest loss.

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.

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.

 

Energy futures drop on unexpected jump in crude supplies

NEW YORK (AP) — Oil prices fell Wednesday after the government reported U.S. fuel supplies unexpectedly fell last week and the Federal Reserve cut interest rates but gave no clues about further reductions.

But the pain at the pump continued. Retail gas prices set still another record, rising to a national average of nearly $3.62 a gallon.

Oil prices were already down sharply earlier in the session after the government reported a surprising jump in crude oil and distillate fuel inventories last week.

In its weekly inventory report, the Energy Department’s Energy Information Administration said crude oil inventories rose by 3.8 million barrels, more than double the increase that analysts surveyed by energy research firm Platts had expected.