Stocks were falling Thursday as Wall Street traders sold shares to cash in on the powerful gains Wednesday that followed Federal Reserve Chairman Alan Greenspan's strong hint of an interest-rate cut.
The Dow Jones industrial average - up 257.21 points, or 3.3 percent, on Wednesday - was off 71.13 at 8,082.58 in active afternoon trading.Wednesday's rally was the fifth-largest point gain ever for the Dow and also sent broader indicators rising sharply. Thursday, broader indicators were falling on profit-taking and worries about upcoming corporate earnings reports.
But Asian markets soared Thursday, lifted by hopes that falling interest rates would help fight economic crises that have engulfed the region, spread to Russia and threaten Latin America. European markets, which opened higher, gave up their gains to close with losses.
The Financial Times-Stock Exchange 100-share index in London, up 107 points in the morning, reversed course and fell 47.1 points to close with a loss of 0.9 percent. Traders said the market sagged after a Confederation of British Industry survey said export orders for U.K. manufacturers fell to 15-year lows.
"The good news at this stage is that the Fed will cut rates at some stage, while the bad news is that things are certainly going to get worse," said Peter Caulkett, a salesman at Teather and Greenwood in London.
The key index in Frankfurt, Germany, key index closed down 1.1 percent amid nervousness in advance of the national election Sunday. In Paris, the main market gauge fell 1.2 percent.
Key market indicators closed with gains of 3 percent in Japan, 4.4 percent in Hong Kong and 6.4 percent in South Korea.
Asian analysts attributed the stock rally to Greenspan's testimony Wednesday to the Senate Budget Committee. He said the central bank's policymakers, who meet Tuesday, know they have to act quickly to contain the global crisis. Traders and analysts said it was a clear sign that rates would be cut soon.
Greenspan indicated the central bank was ready to act to prevent the widening global turmoil "from really spilling over and creating some very significant difficulties for all of us."
There was more evidence Thursday of a cooling economy in the United States. The government reported the gross domestic product - the sum of all goods and services produced within U.S. borders - advanced at a 1.8 percent annual rate in the second quarter of this year after shooting up at a 5.5 percent rate during the first three months of the year.
Economists often disagree over whether a small U.S. interest rate cut would have much of a long-term impact on other countries, especially the markets of Asia, where some countries are working hard to overhaul the struc-tures of their battered economies. But a cut in U.S. lending rates could help bolster global confidence.