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Fed rates and stocks down

Markets plunge despite confidence-bolstering

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NEW YORK — The Federal Reserve cut interest rates Monday, then scared investors sent stocks reeling Monday as Wall Street resumed trading after its longest shutdown since the Great Depression.

The Dow Jones industrial average set a record for a one-day point drop and closed below 9,000 for the first time in more than 2 1/2 years.

The Dow ended a difficult day down 684.81 at 8,920.70, according to preliminary calculations. The previous record for a one-day drop was 617.78, set April 14, 2000.

The NASDAQ Composite Index dropped 115.83, or 6.8 percent, to 1579.69. The S&P 500 slipped 53.75, or 4.9 percent, to 1038.79, its biggest loss since April 14, 2000.

Today's selloff erased $591.2 billion from the value of U.S. stocks, as measured by the Wilshire 5000 Total Market Index, the market's broadest indicator.

After a two-minute silence and the singing of "God Bless America," Wall Street resumed operations after a four-day shutdown only a few blocks from the still-smoking rubble of the World Trade Center's 110-story twin towers.

Airline, insurance and entertainment stocks were among the hardest hit during the day.

"To buy stocks you need some kind of clarity and confidence, and right now you've got neither," said Bill Barker, investment consultant at Dain Rauscher in Dallas. "The buying public is sitting on its hands. The sellers are obviously in control, but it's difficult to tell how long that will last."

In late afternoon trading, the Dow fell 673.01, or 6.2 percent, to 8,933.50.

Just before Wall Street reopened, the Federal Reserve cut interest rates by half a percentage point to bolster confidence and keep markets functioning. With Washington's war talk fueling uncertainty and fears of a global recession growing, traders had been prepared for sharp declines.


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The latest toll of missing people in New York is 4,957, with 190 more confirmed dead. Another 188 died at the Pentagon and 45 in the crash of a hijacked plane in Pennsylvania.

A Reuters/Zogby poll found 71 percent of American voters were ready to see the United States go to war against countries that "harbor or aid terrorists" even if it meant suffering substantial U.S. casualties; 21 percent were opposed.

The White House has vowed retaliation by a "mighty giant" for last Tuesday's attacks in which 19 men hijacked four commercial planes, crashing two of them into the the World Trade Center and a third into the Pentagon. The fourth crashed in Pennsylvania after passengers struggled with the hijackers.

The cost of the attacks will be colossal. Ahead of the Wall Street opening, the government signaled it was ready to provide economic props to try to keep the United States from sliding deeper into a downturn.

The Bank of Japan, desperate to prevent its currency from rising, Monday bought dollars for yen in the first intervention in nearly a year.

The grief of mourning Wall Street financiers was matched by their resolve to get back to business as usual.

A giant U.S. flag fluttered above the entrance to the New York Stock Exchange as thousands of people returned to work.

Asian shares fell in pre-Wall Street nervousness that saw Japan's Nikkei share index drop 5 percent to a 17-year low of 9,504.41 points.

Rescue workers labored for a seventh day over the ruins of the towers in the heart of New York's financial district, but prospects dimmed that any of the missing in the concrete and steel sarcophagus survived.

In a chilling discovery, the body of a male air crew member was found bound hand and foot, a police source said. Earlier, the body of a flight attendant was found with her hands bound.

Away from the site, thousands of posters of those missing covered bus shelters, telephone booths and subway walls.

One, poignant in its simplicity, read: "Have you seen my Daddy? Jason Jacobs." It carried a telephone number and a photograph of a smiling toddler playing with her father.


Contributing: The Associated Press, Bloomberg News Service.