Dow Slumps 13.86 as Hopes for Fed Easing of Credit Fade
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NEW YORK — Stock prices slumped today as hopes faded for any early action by the Federal Reserve to ease credit conditions.
The Dow Jones industrial average closed 13.86 points lower at 2,557.43.
In the broader market, declining stocks led advancers by a 3-2 margin.
Volume on the New York Stock Exchange was 149 million shares.
The market staged a mild rally in late trading Tuesday amid conjecture that the Federal Reserve might be ready to relax its credit policy by seeking to foster a decline in interest rates.
But such hopes seemed to get no support from comments this morning by Alan Greenspan, the Fed’s chairman, before a congressional committee.
On the evidence to date, Greenspan said, “we are not, at least as yet, witnessing a cumulate unwinding of economic activity.” He also observed that the summer upsurge in oil prices had diminished whatever chances existed for a break from persistent inflationary pressures.
Analysts generally interpreted those remarks to mean that the Fed did not see much latitude at present for any significant easing of credit conditions.
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