2008-02-21 13:20:49 SINA English
The stock market finished with a sharp loss Thursday after bleak readings on the economy heightened investors' fears of a recession. The Dow Jones industrial average fell more than 140 points.
Wall Street was disappointed when the Philadelphia Federal Reserve reported that regional manufacturing fell more than predicted. Another piece of bad news was the Conference Board's January index of leading economic indicators, which posted its fourth straight drop.
Traders have already been pricing in another interest rate cut -- perhaps up to half a percentage point -- after minutes from the Federal Reserve's last policy-setting meeting indicated central bankers will remain vigilant about the economy. The Fed, which meets again March 18, has forecasted slower growth and continued risks to the economy from housing and credit markets.
Though investors been assured by the central bank that it will lower rates again if necessary, that expectation has not been enough to galvanize their confidence in the stock market and the economy. Wall Street remains concerned that the economy could be so weak that rate cuts, which take months to work their way through the economy, won't prevent further deterioration.
"The Fed cutting rates is a little bit like a fire engine pulling up to your house," said Brian Gendreau, investment strategist for ING Investment Management. "You're happy help has arrived, but still, your house is burning down."
According to preliminary calculations, the Dow fell 142.96, or 1.15 percent, to 12,284.30.
The biggest loser among the 30 Dow components was General Motors Corp. after lender GMAC LLC, which is part-owned by GM, said it will slash hundreds of jobs at its auto finance business. GM fell $1.24, or 4.9 percent, to $24.30.
Broader indexes also declined. The Standard & Poor's 500 index shed 17.50, or 1.29 percent, to 1,342.53, while the Nasdaq composite index fell 27.32, or 1.17 percent, to 2,299.78.