Fed Unnerves Wall Street

Wall Street grew nervous after the Federal Reserve took steps to prop up the U.S. economy this week, and stocks and interest rates fell. Overseas stock markets dropped sharply this morning—Japan’s Nikkei average was hit hard—and the Dow Jones industrial average followed suit, declining 200 points. On Tuesday the Fed said it would start buying government bonds using cash made from the maturing mortgage-backed securities bought during the worst part of the financial crisis. The Fed hopes to boost borrowing by lowering interest rates on corporate loans and mortgages; it said the economic recovery had slowed in recent months. In reaction, the S&P 500 dropped 2 percent, falling below 1100, a key psychological line. On the New York Stock Exchange, a mere 249 stocks gained value, while 2,512 lost value.