Interest rate cut sees US stocks rise
Stocks bounded higher on Wall Street today after the Federal Reserve lowered interest rates as expected and said risks to the financial markets from the recent credit crisis have eased.
The Dow Jones industrial average gained more than 130 points.
Stocks zigzagged in the minutes after the Fed's decision as some observers read comments from the central bank as indicating further rate reductions were less likely.
However, investors appeared relieved that the Fed's comments about inflation signalled that the central bank was able to return to somewhat more parochial worries and focus less on upheaval in the credit markets than when it met last month.
Investors, businesses and consumers alike would be getting cheaper access to cash because of the Fed's quarter-point rate cut, and that probably gave stocks a boost.
The fed funds rate now stands at 4.50%. Last month, the Fed surprised the market with a larger-than-expected half-point cut in the funds rate.
The Dow, which had dipped briefly into negative territory after the decision, rose 137.54, or 1%, to close at 13,930.01.
Broader stock indicators advanced. The Standard & Poor's 500 index rose 18.35, or 1.20%, to 1,549.38, and the Nasdaq composite index rose 42.41, or 1.51%, to 2,859.12.
