Stocks Slammed Down after Fed Offered No Surprises

U.S. stocks dropped sharply Wednesday, with the major indexes notching deep losses in the last hour of trading, after the Federal Reserve again moved to lower interest rates on consumer loans and noted “significant downside risks” to the economic forecast. The Dow Jones Industrial Average lost 283.82 points, or 2.49%, to 11,124.84. The S&P 500 fell 35.33 points, or 2.94%, to 1,166.76. The Nasdaq Composite lost 52.05 points, or 2.01%, to 2,538.19.

The Federal Reserve on Wednesday, fearful of a “slow” economy, decided to start a program to twist the yield curve by swapping shorter-maturity government securities for longer-dated ones. In a statement, the Fed said it will buy $400 billion of Treasury securities in the 6- to 30-year range and sell an equal amount of maturities of 3 years or less. The Fed said that it was acting in view of “significant downside risks to the economic outlook, including strains in global financial markets.”

Moody’s Investors Service on Wednesday lowered its debt ratings for Bank of America, Wells Fargo and Citigroup. The ratings agency said it has become less likely that the U.S. government would step in and prevent the three lenders from failing in a crisis.

Hewlett-Packard Co’s board convened on Wednesday to consider ousting Chief Executive Officer Leo Apotheker after less than a year on the job and replacing him temporarily with former eBay CEO Meg Whitman.

Austerity-fatigued Greeks were slapped with new tax hikes and pension cuts Wednesday, while the government also pledged to suspend 30,000 civil servants in a hectic scramble to keep its bailout payments flowing and soothe global market fears that Greece will go bust.

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