NEW YORK (AP) - A still-anxious Wall Street closed lower yesterday, sacrificing the advance it made after the Federal Reserve cut interest rates half a percentage point. Investors collected profits after nearly three sessions of big gains, unwilling to leave money on the table amid ongoing economic uncertainty.

It was not surprising that the market pulled back, having suffered months of losses and having driven the Dow Jones industrials up more than 470 points so far this week ahead of the late-day downturn.

Anthony Conroy, managing director and head trader for BNY ConvergEx Group, said expectations of more downgrades of bond insurers like Ambac Financial Group Inc. and MBIA Inc. - as well as uneasiness ahead of today's Commerce Department report on personal income and spending inflation - was enough to spur people to cash in profits from the market's initial gains.

Key reports on the job market and manufacturing set to arrive tomorrow could also add to investors' concerns about the state of the economy, which has been dragged down by a crumbling housing market and losses at major financial institutions.

"Volatility is here to stay," Mr. Conroy said. "People who think these issues will go away overnight in one Fed rate cut are mistaken."

According to preliminary calculations, the Dow, which had been up more than 200 points after the Fed's decision, finished down 37.47, or 0.30 percent, at 12,442.83.

Broader stock indicators also turned lower. The Standard & Poor's 500 index fell 6.49, or 0.48 percent, to 1,355.81, and the Nasdaq composite index fell 9.06, or 0.38 percent, to 2,349.

Government bond prices fell after the Fed's decision, sending yields higher. The yield on the 10-year benchmark note rose to 3.74 percent from 3.68 percent late on Tuesday.

Scott Fullman, director of investment strategy for IA Englander & Co., said it was unlikely the market's downturn was because of disappointment over the rate cut or the Fed's accompanying statement, which if anything asserted that the central bank is willing to lower rates further if needed.

"We're seeing profit taking ahead of the employment report on Friday," Mr. Fullman said. "The market has had a really nice run-up this week, and investors are taking advantage of that."

The fed funds rate, which now stands at three percent, is the interest banks pay one another on overnight loans. It is at its lowest point since spring 2005. The discount rate, now at 3.50 percent, is the interest the Fed charges on loans to banks.

The Fed's decision to cut rates follows an emergency rate cut last week of three-quarters of a percentage point. The central bank stepped in at the time after global markets worldwide fell sharply amid fears that the US economy was tipping into recession and would hurt the global growth. The move was the biggest one-day move in more than 20 years.

The rate cuts came on the same day as fresh evidence arrived that the economy had slowed significantly in the final three months of 2007. Figures showed gross domestic product expanded at a slight 0.6 percent pace in the fourth quarter, less than half what had been expected. For all of 2007, gross domestic product grew 2.2 percent, the weakest rate since 2002.

Yesterday's move was the fifth cut the Fed made since it began making reductions in September following turmoil in the credit markets and in stocks markets.

"The consumer is essentially under enormous pressure," said Thomas Lee, chief US equities analyst at JPMorgan. Lee said that even if the $146 billion tax rebate and business incentive package proposed by the Bush administration is passed February 15 by Congress, it is going to take some time to get into the hands of consumers.

The sub-prime mortgage crisis has been creating problems for homeowners and financial centers alike.

Meredith Whitney, an Oppenheimer and Co. analyst, wrote in a research note before the market opened yesterday that ratings agencies are likely to downgrade already-pummeled bond insurers, which could force banks' assets to lose an additional $40 billion to $70 billion in value this year. That's because, if bond insurers have problems, so could the bonds they insure.

Bond insurer Ambac Financial Group Inc. fell $2.08, or 16.1 percent, to $10.85, while rival MBIA Inc. fell $2.02, or 12.6 percent, to $13.96.

Meanwhile, Swiss bank UBS said it will have a $11.4 billion fourth-quarter loss mostly because of bad investments in sub-prime mortgages. Analysts had expected a much smaller shortfall. French bank BNP Paris yesterday said its quarterly profit will decline by 40 percent from year-earlier levels.