US stocks rally on historic Fed rate cutDecember 17th, 2008 - 5:52 am ICT by IANS
New York, Dec 17 (DPA) US stocks rallied Tuesday after the Federal Reserve cut interest rates to a historic low and promised to use “all available tools” to stabilise the financial system.The Fed slashed its federal funds rate to an unprecedented “target range” of 0-0.25 percent, the first time it has not set an exact rate, in a bid to revive the US economy, which is already in a year-long recession.
The US central bank also said it was prepared to expand its already-massive efforts to inject liquidity into banks and other struggling companies in order to revive the world’s largest economy.
US stocks climbed more than four percent on the news but the dollar fell against the euro and yen.
Financial shares improved after Goldman Sachs reported a fourth-quarter loss - its first in a decade - that was nevertheless better than expected in the current financial climate.
The Wall Street firm posted a loss of $2.12 billion compared to earnings of $3.2 billion in the year-earlier period.
The blue-chip Dow Jones Industrial Average surged 359.61 points, or 4.2 percent, to 8,924.14. The broad-based Standard and Poor’s 500 jumped 44.61 points, or 5.14 percent, to 913.18. The technology-heavy Nasdaq Composite Index climbed 81.55 points, or 5.41 percent, to 1,589.89.
The US currency fell to 71.217 euro cents from 71.42 euro cents Monday. It also dropped against the Japanese currency, to 88.95 yen from 89.05 Monday.