Federal Interest Rate Cuts Lead to Crazy Day on Wall Street

JONESBORO (KAIT)-"We live in a global village today, and it's important to recognize that problems over there, sometimes are caused by problems here," said BancorpSouth President Joe Williams.

Therefore the Federal Reserve made a monumental move tuesday morning - making an emergency interest rate cut as fears were mounting about a recession.

"For people that owe money, it's a great day. For people who have money, they're going to see less of a return on their certificates of deposits and savings for the foreseeable future," said Williams.

The U.S. Central Bank slashed interest rates by 75 basis points down to 3.5% after some of the biggest worldwide market drops in years.

Still after Wall Street's opening bell there was another freefall of trading points down to more than 465 within the first couple of minutes.

So how is Tuesday's financial roller coaster affecting us?

"Most people are going to see the changes as a result of today's activity in their retirement plans. They are initially going to see a little bit of a jolt, because it's going to take a while for stocks to recover. Coincidentally some stocks have already began to recover today," said Williams.

And that recovery signaled good news for the Bush Administration just hours after the interest rate cut went into effect.

"What I think this shows to the country and the rest of the world is that the nation's bank is nimble and can move quickly to adapt to market conditions...it should be a real confidence-builder," said Secretary of Treasury Henry Paulson.

And while it may be too soon to know the true cost or gain from today's market movement, as always, there's tomorrow.

"This is a short term blip. People shouldn't knee jerk react and begin to pull money out. Saving money is still the best defense against inflation. Tuck back all that you can. What you earn on it is secondary," said Williams.

By the end of the day, the stock market closed down 128 points to 11,971.

It's the first time the Dow Industrial Averages have fallen below 12,000 since November 2006.

The Dow is now at a 14 month low.

Story ideas or comments?  Email Will at wcarter@kait8.com.