Wall Street falls ahead of Fed rate move

NEW YORK -- Wall Street pulled back Tuesday as investors, already uneasy ahead of the Federal Reserve's interest rate decision, grew more concerned about the economy after a drop in consumer confidence.

The market has been angling for a rate cut following the Fed's half-point reduction in September, and investors expect the central bank to deliver a quarter-point cut at the conclusion of its two-day meeting on Wednesday. But inflation remains a threat, with oil prices near record highs and the dollar in sharp decline, and there is no certainty the Fed will indeed lower rates.

The price of commodities from crude oil to corn has risen as the dollar has lost ground to other currencies. That trend could mean higher inflation. However, those arguing for lower rates say such a stimulant is needed to prevent a housing slump and credit market troubles from hurting economic growth.

Some on Wall Street fear the economy could slip into recession if no action is taken. The Conference Board said its gauge of consumer sentiment fell to its lowest level in two years in October, coming in at 95.6 following a revised 99.5 in September. Analysts had expected a reading of 99.5 for this month.

Merrill Lynch & Co. Chairman and Chief Executive Stan O'Neal on Tuesday retired as expected after the stock brokerage last week posted the biggest quarterly loss in its 93-year history last week. Alberto Cribiore, a director since 2003, was named as interim non-executive chairman.

The Dow Jones industrial average dropped 62.75, or 0.45 percent, to 13,807.51.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 8.21, or 0.53 percent, to 1,532.77, while the Nasdaq composite index lost 10.84, or 0.38 percent, to 2,806.60.