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For the second day in a row, interest rate cuts by the Federal Reserve failed to perk up the stock markets. The Dow Jones Industrial Average dropped 2.4% to hit its lowest point in two years, closing down 233.76 points at 9487 points. The tech-heavy Nasdaq index did little better. After a 40-point advance earlier in the day, it gave back all gains and closed down 1.46%, dropping 27.21 to close at 1830.23.

Agency stocks took a beating as well, with troubled MarchFirst Inc. again the hardest hit. MarchFirst closed down 18.18% at 28 cents, down 6 cents. Grey Global Group shares and Publicis Groupe American Depository Receipt shares were down 4.76% and 4.47%, respectively. Grey closed down $34.50 at $690.50, and Publicis ADRs closed down $1.44 at $30.81.

Most analysts called for patience among investors and parsed the Fed's statement to show more cuts will follow. Merrill Lynch & Co. chief global investment strategist David Bowers noted the market is not taking into account the usual nine-month lag between interest rate cuts and market reactions, while chief economist Bruce Steinberg forecast the Fed will likely cut rates another 0.5% at each of its upcoming meetings on May 15 and Aug. 21. -- Mercedes Cardona

Copyright March 2001, Crain Communications Inc.

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