NEW YORK (AP) - Wall Street finished moderately lower yesterday, 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 $2.37 billion, or $2.34 per share, for the fiscal fourth quarter. The report 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 four percent and other indexes gained more than five percent. The moves came after the central bank lowered its federal funds rate target to a range of zero to 0.25 percent - 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.

The Fed's move was an unprecedented one aimed at boosting borrowing and lending. The central bank said on Tuesday it anticipates the weak economy will keep the target rate low for "some time," and added that it is mulling the possibility of buying Treasurys - in effect, printing new money.

Still, despite yesterday's decline, investors have been rather resilient in recent trading sessions, an encouraging sign for analysts who believe the market might be entering a period of stability after the unrelenting selling of the past three months.

"Even if the market is down 100 points, the fact that it's been in a narrow trading range I think is very positive," Mr. Waddell said.

According to preliminary calculations, the Dow Jones industrial average fell 99.8, or 1.12 percent, to 8,824.34, after falling as many as 146 points earlier in the session. The Standard & Poor's 500 index slipped 8.76, or 0.96 percent, to 904.42, and the Nasdaq composite index fell 10.58, or 0.67 percent, to 1,579.31.

But the Russell 2000 index of smaller companies was up 3.74, or 0.77 percent, to 486.59.

Advancing issues outnumbered decliners by about three-to-two on the New York Stock Exchange, where volume came to a light 1.34 billion shares.

Volume will likely remain light for the remainder of the year as investors break for the holidays. Light volume tends to skew the market's movements, and could increase volatility in the coming sessions, analysts said.

The Fed's action on Tuesday is expected to lower rates on everything from home equity loans to credit card loans. Mortgage rates are also expected to fall further after the Fed renewed its pledge to buy up billions of dollars of mortgage debt.

These moves could put billions of dollars into the pockets of consumers at a time when Americans have sharply cut back on spending amid rising unemployment and declining household wealth.

But many experts believe that the interest rate cuts alone will not be enough to jump-start the economy.

"It's a tall order to get them to go out and spend again," said Joseph LaVorgna, chief US economist at Deutsche Bank. "That's why you also need a stimulus."

President-elect Barack Obama's advisers are currently contemplating an economic recovery plan that could cost as much as $1 trillion over two years.

Fresh evidence of a still-weakening job market only exasperated investors' concerns. The Cooper Tire and Rubber Co. said yesterday it will cut 1,300 jobs and close a plant in Georgia, while Newell Rubbermaid Inc. is reducing its salaried work force by as much as 10 percent.

The maker of products including Rubbermaid storage containers and Sharpie pens also slashed its fourth-quarter and full-year profit guidance.