Wall Street closes with a rally as Fed cuts rates

NEW YORK : Wall Street shares closed with a rally on Wednesday after the Federal Reserve, in a widely expected decision, cut short-term interest rates amid a persistent housing slump.
The Fed cuts its short-term federal funds interest rate by a quarter of a percentage point to 4.50 percent, saying it had acted amid fears that US economic growth will likely slow in coming months.
The Dow Jones Industrial Average finished up a hefty 137.54 points (1.00 percent) at 13,930.01 as Wall Street applauded the rate cut.
The tech-laden Nasdaq leapt 42.41 points (1.51 percent) to 2,859.12, while the broad-market Standard & Poor's 500 surged 18.36 points (1.20 percent) to 1,549.38.
"It was rally time on Wall Street. The market was treated to a Halloween Eve interest rate cut of 25 basis points," said Al Goldman, a chief market strategist for AG Edwards.
The financial markets rallied strongly in the wake of the Fed rate reduction and after a government report on Wednesday showed third quarter economic growth accelerated a notch to 3.9 percent.
The Fed slashed borrowing costs on September 18 by a more dramatic half a percentage point, but the ongoing housing slump - one of the worst in decades - persuaded the central bank to implement another cut.
"The pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction," the Fed said in a statement.
The Fed said policymakers, led by Fed chairman Ben Bernanke, had reduced rates in an effort to keep the world's largest economy growing at a "moderate" pace.

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