US stocks rally on historic Fed rate cut
US stocks rallied Tuesday after the Federal Reserve cut interest rates to a historic low and promised to use "all available tools" to stabilize the financial system, dpa reported.
The Fed slashed its federal funds rate to an unprecedented "target range" of 0-0.25 per cent, 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 4 per cent 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 dollars compared to after earnings of 3.2 billion dollars in the year-earlier period.
The blue-chip Dow Jones Industrial Average surged 359.61 points, or 4.2 per cent, to 8,924.14. The broad-based Standard and Poor's 500 jumped 44.61 points, or 5.14 per cent, to 913.18. The technology- heavy Nasdaq Composite Index climbed 81.55 points, or 5.41 per cent, to 1,589.89.
The US currency fell to 71.217 euro cents from 71.42 euro cents on Monday. It also dropped against the Japanese currency, to 88.95 yen from 89.05 on Monday.