The US Markets ended lower for third consecutive session last night, as the Dow Jones crumbled under inflationary pressures after the Philadelphia Fed President Charles Plosser said that an overly aggressive rate-easing campaign by the Federal Reserve would only fuel higher inflation down the road, 

This made the markets nervous with the economic data releases for the day also not providing any major support. The U.S. Labor Department said that non-farm productivity was up 1.8% in the fourth quarter and up 2.6% from a year ago, stronger than expected. Also, unit labor costs were up 3.1% in 2007.

Plosser spoke against overly aggressive rate cuts, dampening a rebound from the market's largest single-day plunge in nearly a year. Also weighing on equities was word from Standard & Poor's that Merrill Lynch & Co is at risk of a downgrade due to troubles at bond insurers and collateralized debt obligations. 

As a cumulative effect, the Dow Jones Industrial Average pared its early gains to fall into negative territory after Plosser warned against easing rates too quickly, saying it would only fuel inflation down the road. Dow closed at 12,200.10, down 65.03, or 0.5% with 22 of its 30 components finishing lower. 

The Dow's decliners included General Motors Corp., which shed 2.87% after its downgrade to under perform by Bear Stearns, which also lowered its rating on Ford Motor Co, which dropped 1.87%, citing worries over consumers' ability to buy cars and trucks.

In other indices, the S&P 500 fell 10.19 points to 1,326.45 and the technology-heavy Nasdaq Composite shed 30.82 points to 2,278.75. 

Meanwhile, the overall sentiments in the risky assets continued to be anxious after a mammoth 370 point fall by the Dow on Tuesday with the Institute for Supply Management's non-manufacturing index showed a contraction in business activity in January, 2008, sending clear signals of recession hitting the US economy. The index plummeted to 41.9 in January 2008 from 54.4 in December, its largest monthly decline on record. The decline in the index reignited fears that the U.S. economy was in a slowdown. A number below 50 reflects a contraction. Market was expecting a figure of 53 for the month of January. 

Recession concerns were further fuelled by the realization that the January report marked the first contraction in the non-manufacturing sector in nearly five ye

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