The Federal Reserve Board, in a surprise move, today cut interest rates sharply, sparking a rally on Wall Street. The Fed, citing "further weakening of sales and production and lower consumer confidence, cut the overnight bank lending rate by 50 basis points to 6%. The Fed also noted that tight credit and high energy prices had sapped household and business purchasing power. At the request of seven of the Federal Reserve districts, the central bank also cut the discount rate the interest rate it charges on loans to member banks by 25 basis points to 5.5%.
The Dow Jones industrial average rose 299.60, or 2.81%, to close at 10,945.75; the S&P 500 was up 64.30, or 5%, to end at 1,347.57; and the Nasdaq composite closed up 324.82, or 14.17%, at 2,616.68. All numbers are preliminary.