US markets fall on Fed's rate cut and warning of "weak" economy
US stocks closed lower Wednesday after the Federal Reserve cut its benchmark rate and government growth figures indicated the world's largest economy avoided a contraction in the first quarter, the dpa reported.
The US central bank lowered its federal funds rate by a quarter- point to 2 per cent, warning that "economic activity remains weak" on the back of lower consumer and business spending, and the ongoing crisis in housing and financial markets.
Stocks had opened higher after the Commerce Department's initial estimate showed the US economy grew by an annualized rate of 0.6 per cent in the first quarter, unchanged from the last three months of 2007.
But the gains were soon erased after the Fed warned the credit crisis would likely continue to "weigh on economic growth" in the coming quarters.
The blue-chip Dow Jones Industrial Average fell 11.81 points, or 0.09 per cent, to 12,820.13. The broader Standard & Poor 500 Index was down 5.35 points, or 0.38 per cent, to 1,385.59. The technology- heavy Nasdaq Composite Index declined 13.30 points, or 0.55 per cent, to 2,412.80.
The dollar dropped against the euro to 64.00 euro cents from 64.23 euro cents on Tuesday, and fell to 103.89 Japanese yen from 104.04 yen.
Gold fell 11.70 dollars to 865.10 dollars per fine ounce.