Market closes mixed on heels of Fed rate cut

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By Sean Lengell

Trading on Wall Street was mixed Wednesday after the Federal Reserve cut its key lending interest rate half a point in an effort to halt the credit crisis from pushing United States into a sustained recession.

Dow Jones Industrial Average surged following the Fed's mid-afternoon announcement that it was cutting its lending rate but lost more than 400 points in a sell off in the final half hour.

The Dow fell 74.16 points, 0.82 percent, to 8,990.96 at the market close, while the Nasdaq edged up 7.74 points, 0.47 percent, to 1,657.21. The broad-market Standard & Poor's 500 index fell 10.42 points, 1.11 percent, to 930.09.

On the New York Stock Exchange, 1,954 stocks advanced and 1,145 declined on a volume of 8.52 billion shares traded.

Meanwhile, the Treasury Department says it has made the first payments from the $700 billion rescue fund that Congress approved earlier this month --a total of $125 billion in stock purchases from nine major financial institutions.

The program is designed to pump money into the nation's banks to loosen the credit crunch and stabilized the faltering economy.

The Fed's new 1.0 percent rate matched the most recent lows of 2003 and 2004.

Low interest rates were blamed for spurring the housing bust of the past year. But analysts say an interest rate cut is necessary to stem the current financial crisis.

Some analysts speculate the precarious state Wall Street and the economy may lead to further interest rate cuts. But a decision on future cuts likely would be put off until the effects of Wednesday's cuts are felt.

World stocks jumped Wednesday ahead of the Fed's announcement to cut the interest rate.