US stocks rally on Federal Reserve’s $200 bn plan

March 12th, 2008 - 6:24 am ICT by admin  

Washington, March 12 (DPA) US stocks got a positive push Tuesday from a pledge by the US central bank to pump $200 billion into the US financial system. The three major stock indices climbed nearly four percent, the largest one-day jump in at least five years, ending a three-day slump.

The move by the Federal Reserve is the latest by the US government to buoy the world’s largest economy, which is being dragged down by mortgage foreclosures, mostly on sub-prime lenders, and the ensuing credit crisis.

Since January, Congress passed a $150-billion tax-rebate stimulus package and the Fed slashed interest rates by 1.25 points to three percent in an effort to stave off recession. Projections for 2008 growth have been lowered to between 1.3 and 2 percent, down from the 1.8 to 2.5 percent expected in October.

News of the latest Fed move - which will also benefit European banks - delivered gains to Citigroup Inc, Bank of America Corp and Fannie Mae, which led the Standard & Poor’s 500 Financials Index to its biggest gain in eight years, Bloomberg financial news service reported.

The Dow Jones Industrial Average of blue chips gained a whopping 416.66 points, or 3.55 percent, to 12,156.81 - above the psychological barrier of 12,000. The broader S&P 500 Index climbed 47.28 points, or 3.71 percent, to 1,320.65. The high tech NASDAQ composite index regained 86.42 points, or 3.98 percent, to 2,255.76.

The US currency climbed against the euro to 65.2 euro cents from 65.18 euro cents Monday, and against the Japanese currency to 103.45 yen from 101.80 yen Monday.

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