The Federal Reserve cut a key interest rate by one-quarter of a percentage point Tuesday, but Wall Street took a tumble. Investors were disappointed that the central bank did not act more boldly to keep the U.S. out of a recession.
The reduction in the federal funds rate to 4.25 percent marked the third rate cut in the past three months. Fed officials signaled that further cuts were possible if a severe housing downturn and mortgage lending crisis get worse.
But Wall Street was looking for a much stronger sign. The Dow Jones industrial average, which had been up about 40 points in afternoon trading, plunged by more than 200 points as investors deciphered …
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