US stocks drop on Fed forecast, record oil prices

May 22nd, 2008 - 5:54 am ICT by admin  

New York, May 22 (DPA) US stocks fell sharply Wednesday after the Federal Reserve cut its 2008 growth forecast but suggested it had finished slashing interest rates for the time being, while another record crude oil price drove down retail and transport shares. The US central bank predicted growth of between 0.3 percent and 1.2 percent for the year, down from a January projection of 1.3 per cent to 2 percent.

The Fed’s April decision to cut its benchmark interest rate by another quarter point to two percent had been a “close call” as members weighed an economic slowdown against inflation risks, according to the minutes of the Federal Open Market Committee’s meeting.

Retail and airline stocks plummeted as crude oil climbed above $133 per barrel in New York trading, while financial shares continued to fall amid the ongoing credit crisis.

The blue-chip Dow Jones Industrial Average dropped 227.49 points, or 1.77 percent, to 12,601.19. The broader Standard & Poor’s 500 Index was down 22.69 points, or 1.61 percent, to 1,390.71. The technology-heavy Nasdaq Composite Index lost 43.99 points, or 1.77 percent, to 2,448.27.

The dollar fell to 63.34 euro cents from 63.79 euro cents on Tuesday and slipped against the Japanese currency to 103.06 yen from 103.18 yen.

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