Federal Reserve Chairman Alan Greenspan boosted interest rates for the 11th time in a row today, but this time there was dissent and a distinctly unfriendly reaction from Wall Street.
The Dow Jones industrial average did a 100-point, 180-degree turn after the Fed's decision was announced, closing down sharply for the second straight day.
The Dow, which lost 84 points on Monday, fell 76 points today to 10,481.52. The Standard & Poor's 500 stock index dropped 10 points to 1,221.34. The Nasdaq Stock Market composite index fell 14 points to 2,131.33.
As the Fed's Open Market Committee met here this morning, the markets began moving higher -- as they often have done when traders were confident about and comfortable with what the Fed was about to do.
But while the decision to boost the overnight lending rate by a quarter of a percentage point to 3.75 percent was no surprise, Wall Street's reaction was. Instead of "steady as she goes" the market fell rapidly, turning the morning's modest gain into a significant loss.
Although Fed watchers had predicted the Fed would continue to ratchet up rates, Wall Street traders were hoping for a pause and made no effort to hide their disappointment.
For the first time in more than two years, a dissenting vote was cast against Greenspan's policy. Committee member Mark Olson broke the unanimity that has backed Greenspan's decision to methodically move interest rates back up to more normal levels after letting them drop to record lows.
In a policy statement, the Fed said Hurricane Katrina will slow down economic growth -- but only temporarily.
The managers of monetary policy said they continued to be more concerned about inflation -- particularly the traumatic jump in fuel prices. And when the Fed fights inflation, its primary weapon is higher interest rates.