Fed Cuts Rates 25bps; Mortgage Stocks Hit

The Federal Reserve Board on Tuesday afternoon cut the target federal funds rate by 25 basis points -- half of what some investors were hoping for -- sending stocks, mortgage equities in particular, on a downward spiral.The short-term benchmark rate now stands at 4.25%. The Dow Jones industrial average closed down 286 points, with some mortgage bellwethers getting hammered. Countrywide Financial lost 9% of its value, closing at $11.40. Other housing finance stocks that suffered include Fannie Mae, down 7%; Freddie Mac, down 10%; Thornburg Mortgage, down 7%; and Wells Fargo, down 5%.