After boost from Fed, stocks stage late retreat

NEW YORK - A still-anxious Wall Street closed lower Wednesday, sacrificing the advance it made after the Federal Reserve cut interest rates half a percentage point. Investors collected profits after nearly three sessions of big gains, unwilling to leave money on the table amid ongoing economic uncertainty.

It wasn't surprising that the market pulled back, having suffered months of losses and having driven the Dow Jones industrials up more than 470 points this week ahead of the late-day downturn.

Anthony Conroy, managing director and head trader for BNY ConvergEx Group, said expectations of more downgrades of bond insurers such as Ambac Financial Group Inc. and MBIA Inc. -- as well as uneasiness ahead of today's Commerce Department report on personal income and spending inflation -- was enough to spur people to cash in profits from the market's initial gains.

Key reports concerning the job market and manufacturing set to arrive Friday could also add to investors' concerns about the state of the economy, which has been dragged down by a crumbling housing market and losses at major financial institutions.

"Volatility is here to stay," Conroy said. "People who think these issues will go away overnight in one Fed rate cut are mistaken."

The Dow, which had been up more than 200 points after the Fed's decision, finished down 37.47, or 0.30 percent, at 12,442.83.

Broader stock indicators also turned lower. The Standard & Poor's 500 index fell 6.49, or 0.48 percent, to 1,355.81, and the Nasdaq composite index fell 9.06, or 0.38 percent, to 2,349.00.

ASSOCIATED PRESS