US stocks rally more than 3 per cent on Fed's 200-billion plan
( dpa )- US stocks got a positive jolt Tuesday from a pledge by the US central bank to pump 200 billion dollars into the battered US financial system.
The three major stock indices climbed nearly 4 per cent, 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 subprime ledners, and the ensuing credit crisis.
Since January, Congress passed a 150-billion-dollar tax-rebate stimulus package and the Fed slashed interest rates by 1.25 points to 3 per cent in an effort to stave off recession. Projections for 2008 growth have been lowered to between 1.3 and 2 per cent, down from the 1.8 to 2.5 per cent 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 per cent, to 12,156.81 - above the psychological barrier of 12,000. The broader S& P 500 Index climbed 47.28 points, or 3.71 per cent, to 1,320.65. The high tech NASDAQ composite index regained 86.42 points, or 3.98 per cent, to 2,255.76.
The US currency climbed against the euro to 65.2 euro cents from 65.18 euro cents on Monday, and against the Japanese currency to 103.45 yen from 101.80 yen on Monday.
Gold prices gained 4.20 dollars to 976.42 dollars per fine ounce.