The Fed Can’t Save Markets

Stocks slump after latest boost.


The Fed is buying up commercial paper and is now hinting at an interest rate cut.

So what's the Dow doing?

Falling. Again.

As of midafternoon, stocks appear to be headed for a fifth straight day of losses.U.S. officials called for a "forceful and coordinated" reaction to the crisis after the Dow fell as much as 800 points Monday and ended the day below 10,000.

Maybe the losses continue because no matter what kind of bailout plan is put into place, investors are finally waking up to some harsh economic realities. As Bernanke put it:

"All told, economic activity is likely to be subdued during the remainder of this year and into next year. The heightened financial turmoil that we have experienced of late may well lengthen the period of weak economic performance and further increase the risks to growth."

Yesterday, we looked at 5 Bad Signs for a Dow Below 10,000. A day later, not much has changed.