Stocks ended mixed yesterday, after a sour earnings forecast from drug giant Merck & Co let the air out of a rally sparked by the US Federal Reserve's 11th interest-rate cut this year.

The Fed's widely anticipated quarter percentage point cut brought the key federal funds rate to 1.75 per cent, its lowest level in 40 years. The central bank said the economy was soft and there were only tentative signs weak demand was firming - hinting it stands ready to cut rates further if necessary. The bank has embarked on one of the most aggressive rate-cutting campaigns in its history as it tries to pull the US economy out of recession.

An upbeat forecast from mobile phone giant Nokia put a shine on the tech sector early in the day. Merck, however, slammed the blue-chip Dow Jones industrial average after it predicted flat earnings in 2002 as key drugs continue to go off patent and lose sales to cheaper copy-cat medicines.

The Dow slumped 33.08 points, or 0.33 per cent, to 9,888.37, with Merck down $6.29 at $60.70, slashing about 44 points from the blue-chip gauge.