Fed discount rate cut sends stock market index futures soaring

[Cruzan]

NEW YORK (Reuters) - Stock index futures soared on Friday after the Federal Reserve unexpectedly cut the discount rate by half a percentage point to 5.75 percent in a move to soothe investors' fears about market liquidity.

The Fed cut the rate that it charges member banks for loans. The Fed said it cut the rate as the downside risks to growth have increased "appreciably."

"This (move by the Fed is) pretty significant, looking at the major move in the stock futures. A lot of people were hoping for this," said Cleveland Rueckert, market analyst at Birinyi Associates Inc. in Stamford, Connecticut. "Even so, I still think it's time to wait and see. There's still uncertainty."

S&P 500 futures were up 26.3 points, well above fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures rose 189 points, and Nasdaq 100 futures gained 41.50 points.

http://today.reuters.com/news/articlenews.aspx?type=topNews&storyid=2007-08-17T123856Z_01_L13383957_RTRUKOC_0_US-MARKETS-STOCKS.xml


What's this about a free market we live in?

[Blackhatjack]

1. Check in at close of market today to see if this works as advertised...

There has been a lot money fleeing losses and no where to go.

Plus there are a lot of traders who 'shorted' so many stocks, and now they have to 'buy' or cover their positions to lock in their profits.

Once money is repositioned and shorts are covered, we will see if the crisis has played itself out.

Also keep in mind that this action allows a lot of people to 'get out' on a bump up without taking a huge loss. What happens when they do not reinvest in stocks?

We are a long way from home free.

[SoCalDem]

2. Happpppppy Daysssssss are here againnnnnn:)

Straight-jackets for everyonnnnne :)