US stocks dip

Stocks fell moderately today as Wall Street anxiously awaited the Federal Reserve’s impending decision on interest rates.

The market is betting on a rate cut from the Fed when the central bank meets tomorrow, but investors are not completely sure what it will do and what it will say in its accompanying economic statement.

Furthermore, with the major brokerages’ third-quarter results yet to be released, investors are uncertain about how badly the summer’s stock downturn, souring home loans, and credit squeeze hit the banking industry.

Adding to the uneasiness, Northern Rock PLC, Britain’s fifth-largest mortgage lender, saw its stock plunge and customers withdraw billions of dollars after it issued a profit warning Friday and drew on emergency funds from the Bank of England. That gave US investors an added impetus to pare their stock holdings, particularly in the financial sector.

Talk from former Fed Chairman Alan Greenspan of the possibility of a recession amid high inflationary pressures also elevated Wall Street’s jitters, as did job cuts at Merrill Lynch & Co’s First Franklin Financial Corp.

According to preliminary calculations, the Dow Jones industrial average fell 39.10, or 0.29%, to 13,403.42.

Broader stock indicators showed somewhat steeper losses. The Standard & Poor’s 500 index fell 7.60, or 0.51%, to 1,476.65, and the Nasdaq composite index lost 20.52, or 0.79%, to 2,581.66. The Russell 2000 index, which tracks small company stocks, fell 7.68, or 0.98%, to 775.81.

Bonds rose modestly, pushing the yield on the 10-year Treasury note down to 4.47% from 4.48% late Friday.