Stocks Surge on Fed Cut

The major averages continue to trade above the unchanged line on Friday despite recent weakness. Stocks opened the session posting significant gains on the heels of a rate cut from the Federal Reserve

The Fed cut the discount rate by half a percentage point this morning in hopes of adding liquidity to the credit markets. The fact that they cut the discount rate instead of the federal funds rate is seen as evidence that the problem is mainly contained within the financial sector rather than the economy at large.

Crude oil futures for September delivery added 1.5% to $72.05 a barrel on news that a hurricane headed toward the Gulf of Mexico may threaten rigs and pipelines. Gold futures for December delivery added 2% to $670.90 an ounce.

Around Asia, Shanghai's Composite index dropped 2.3% to 4,656.57, Hong Kong's Hang Seng index fell 1.4% to 20,387.13, and Tokyo's Nikkei index lost 5.4% to 15,273.68.

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Darren Wong
Associate Editor
darrenw@tradingmarkets.com

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