Wall Street Jump After Rate Cut

Source: Exec Digital USA

Date :11/1/2007 3:50:06 AM

Stocks bounded higher Wednesday after the Federal Reserve lowered interest rates as expected and said risks to the financial markets have eased.

The Dow Jones industrial average rose more than 100 points.

While the Fed's language in the statement accompanying its rate move made the likelihood of a further reduction less likely, stock investors appeared relieved that the Fed sounded a somewhat upbeat note about the economy.

The Fed's comments about inflation signaled the central bank was able to return to somewhat more parochial concerns and worry less about upheaval in the credit markets than when it met last month.

It took Wall Street some time after the Fed's statement to come to its upbeat assessment; stocks initially gyrated as investors suffered some angst over the prospect that rates would not continue to fall.

The fed funds rate now stands at 4.50 percent. Last month, the Fed surprised the market with a larger-than-expected half-point cut in the funds rate.

In late afternoon trading, the Dow, which had dipped briefly into negative territory after the decision, rose 138.92, or 1.01 percent, to 13,931.39.

Broader stock indicators advanced. The Standard & Poor's 500 index rose 18.33, or 1.20 percent, to 1,549.35, and the Nasdaq composite index rose 40.85, or 1.45 percent, to 2,857.56.

November 1 2007