U.S Fed cut interest rates for third time; Stocks Plunged

The Federal Reserve cut the interest rate today by a quarter of a percentage point, to 4.25 percent, although it was expected to be a bigger cut than this. This had a massive impact on almost all the stocks; however the Treasury bonds prices rose. “A mild recession is now likely, with no growth for the year ahead,” Richard Berner, chief domestic economist at Morgan and Stanley declared in a report to clients this week.

The U.S. Stocks were hit by the rate cuts, the Fed’s move slumped the Dow Jones Industrial Average Index to 2.14 percent. And the S&P 500 Index saw a decline by 38.31 or 2.53 percent, to 1,477.65 at close time.

The U.K‘s benchmark FTSE 100 Index fell by 0.43, to 6,536.90 at 10.00 a.m. in London with the Germany's benchmark stock index the DAX Index declining to 0.3 percent.

The Asian stock market also showed a down slope with the Japanese stocks falling high after the Federal Reserve cut interest rates by a quarter points. This disappointed the Asian investors at large. The Nikkei 225 declined by 112.46, or 0.7 percent, to 15,932.26 at the close of trading in Tokyo. Of the index's 225 stocks, 73 rose and 140 declined and 12 were unchanged.

However the fact is very clear that the U.S Fed rate cuts have largely influenced the stocks and any rate cuts further would bring them even down. But the Bond market is flying high with investors showing much interest towards them rather than the stocks. In future may be the Bonds, the Commodities and the currencies will be at higher end than the stocks.

Oil prices fall to $85 after a record of $90 barrel last week

The Oil prices have declined to $85, every day since crude prices rose to a record above $90 a barrel last week. The oil prices went high last week because of the Concerns about a disruption in Iraq. Oil prices dropped further Wednesday ahead of the release of weekly U.S. fuel data expected to show crude stocks rose last week.

Analysts surveyed by Dow Jones Newswires on average predict crude inventories rose 300,000 barrels during the week ended. However, estimates vary widely, ranging from an increase of 2 million barrels to a decrease of 2 million barrels. Analysts also predict the EIA report will show refinery utilization rose 0.3 percentage points; gasoline supplies, still near record lows, rose 1.1 million barrels; and distillate stockpiles, which include heating oil and diesel, rose 200,000 barrels.

Light, sweet crude for December delivery fell 75 cents to settle at $85.27 on the New York Mercantile Exchange. December Brent crude declined 8 cents to $82.77 a barrel on the ICE futures exchange in London. Heating oil futures rose 0.02 cent to $2.30 a gallon while gasoline prices fell 0.04 cent to $2.1085 a gallon. November natural gas fell 13 cents to settle at $6.761 per 1,000 cubic feet. Gasoline supplies, still near record lows, likely rose 1.1 million barrels, and distillate stockpiles, which include heating oil and diesel, likely rose by 200,000 barrels.

Although oil keeps fluctuating, as seen it showed a record high last week and suddenly dropped by Wednesday. If this continues the oil prices will go down to a record level in not more than few days.