In the currency market, the dollar slipped further against the euro, falling below the $1.30 mark. Late Tuesday, the euro was trading at $1.3013 vs. $1.2905 on Monday.
Traders reacted with disdain for the Fed’s latest inflationary move, a plan under which it will lend up to $800 billion to support the issuance of debt backed by consumer and small-business debt -- such as credit-card loans, student debt, auto loans and loans backed by the Small Business Administration.
“The Bush administration … has now made a colossal announcement aimed at putting a bottom in the asset market,” wrote Kathy Lien, of Global Forex Trading. “For investors that have been concerned about the funding crisis, this is an even bigger reason to sell dollars,” she said, noting it will cause the Fed's balance sheet to balloon to $3 trillion.
Nor were the day’s hard numbers encouraging, with the Commerce Department saying the U.S. economy contracted at a 0.5% annual rate in the third quarter, worse than the negative 0.3% estimated a month ago. The GDP revision was largely due to weaker consumer spending.
And Standard & Poor's said its Case-Shiller index of home prices in 20 major U.S. cities dropped 1.8% in September from August, and has fallen a record 17.4%, year over year.
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