Wall Street finished moderately lower, as further signs of economic deterioration dampened investors' earlier enthusiasm about the Federal Reserve's record interest rate cut.

Stocks declined in the early going after a larger-than-expected loss from Morgan Stanley offered fresh evidence of the sizable obstacles the battered financial industry still faces. The company posted a loss of USD 2.37 billion, or USD 2.34 per share, for the fiscal fourth quarter. The report yesterday came a day after rival Goldman Sachs Group Inc posted its first quarterly loss since going public in 1999.

Some selling had been expected after Tuesday's huge rally in which the Dow Jones industrial average rose more than 4 per cent and other indexes gained more than 5 per cent. The moves came after the central bank lowered its federal funds rate target to a range of zero to 0.25 per cent -- the lowest levels on record.

But after briefly moving into positive territory, stocks struggled to hold on to the big gains logged the day before as investors grappled with signs of a worsening economy, including more layoffs and plunging oil prices, and the magnitude of the Fed's actions.

"This is a whole lot of new information for people to digest," said David Waddell, senior investment strategist and chief executive of Waddell & Associates. "Now we need time to sit back ... and figure out what it all means."

Some investors also likely took the Fed's sharp rate cut as an indication of how dire the global financial crisis and economic troubles really are.