Stocks Open Lower as Rate Cut Enthusiasm Wanes

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NEW YORKWall Street reined in its enthusiasm over the Federal Reserve's rate cut Wednesday as more downbeat corporate news offered a fresh reminder of the nation's economic troubles.

Stocks declined in early trading but pared their steepest losses. The decline comes a day after the Federal Reserve cut its federal funds rate target to a range of zero to 0.25 percent and sent stocks charging higher.

A greater-than-expected loss from Morgan Stanley offered the latest evidence of the large obstacles the battered financial industry faces. The company posted a loss of $2.37 billion, or $2.34 per share, for the fiscal fourth quarter.

Some investors also likely turned cautious on worries that the Fed's sharp rate cut is a sign of how dire the global financial crisis and economic troubles really are.

The Fed's move was an unprecedented one aimed at boosting borrowing and lending. The central bank said Tuesday it anticipates the weak economy will keep the target rate low for "some time," and added that it is mulling the possibility of buying Treasurys — in effect, printing new money. In early trading Wednesday, yields on 10-year Treasury notes and 30-year Treasury bonds fell yet again to record lows.

Given that the Dow Jones industrial average rose more than 4 percent on Tuesday and other indexes gained more than 5 percent, it was not surprising that the market would take a step back on Wednesday.

In the first half-hour of trading, the Dow Jones industrial average fell 73.28, or 0.82 percent, to 8,850.86.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 7.57, or 0.83 percent, to 905.61, and the Nasdaq composite index fell 12.61, or 0.79 percent, to 1,577.28.

Morgan Stanley shares fell 54 cents, or 3.4 percent, to $15.59.

In other news, Securities and Exchange Commission Chairman Christopher Cox blamed regulators for a decade-long failure to investigate Wall Street money manager Bernard L. Madoff, now accused of running a $50 billion Ponzi scheme. Cox said staff attorneys never bothered to seek a formal commission-approved investigation that would have forced Madoff to surrender vital information under subpoena.

The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude fell 53 cents to $43.07 a barrel on the New York Mercantile Exchange.

The recent decline in oil prices is helping to lower the U.S. current account trade deficit — the amount of money the country is borrowing from foreigners. The Commerce Department said Wednesday the current account trade deficit fell by 3.7 percent to $174.1 billion in the July-September quarter. That was a better showing than the $178.8 billion deficit economists expected.

Markets overseas were mostly higher. Japan's Nikkei stock average rose 0.52 percent, while Hong Kong's Hang Seng index rose 2.18 percent. In afternoon trading, Britain's FTSE 100 rose 0.33 percent, Germany's DAX index fell 0.52 percent, and France's CAC-40 rose 0.04 percent.