Fed's Latest Try Sends Stocks on Wild Ride
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Just a day after getting chastised by investors for not doing more to end the credit market crisis, the Federal Reserve tried again on Wednesday and once again ran into skepticism.
After falling more than 2% Tuesday on a rate cut and policy statement that investors felt didn't go far enough, major stock indexes recovered nearly all those losses on Wednesday's open on the biggest global financial rescue since the Sept. 2001 terrorist attacks.
The Fed, the European Central Bank, the Bank of England, the Bank of Canada and the Swiss National Bank announced plans to provide credit to cash-strapped banks.
The result was a huge gap up for stocks followed by even more selling. Stocks were down significantly by mid-afternoon before recovering in the final hour to end the day with modest gains.
The move apparently had been in the works for some time, according to CNBC, and Fed officials took pains to point out that they were not responding to Tuesday's steep market sell-off.
Nonetheless, the Fed's action was enough to stabilize stocks somewhat. The Nasdaq led the major indexes with a 0.7% gain, 1.5% off its highs for the day, while blue chips lagged on another tough day for financial shares.
AT&T and Cisco were strong once again on the former's rosy outlook and spending plans. AT&T was up 6% and Cisco gained nearly 3%. Cisco also benefited from positive analyst comments.
Nextest Systems soared 63% on a buyout offer from Teradyne, while NetManage surged 81% on a buyout offer from privately held Rocket Software. Leap Wireless fell on its acquisition plans.
Network Equipment fell 18% on a convertible offering.
AMD slipped 1% on an impairment charge for its ATI acquisition a day before its analyst meeting.
United Online fell 9% after withdrawing its Classmates Media IPO, and Akamai lost ground on a downgrade.
The Nasdaq added 18 to 2671, the S&P climbed 9 to 1486, and the Dow rose 41 to 13,473. Volume rose to 4.4 billion shares on the NYSE, and 2.31 billion on the Nasdaq. Advancers led by an 18-14 margin on the NYSE, and 15-14 on the Nasdaq. Upside volume was 55% on the NYSE, and 61% on the Nasdaq. New highs-new lows were 59-138 on the NYSE, and 69-169 on the Nasdaq.