Stocks soar into the weekend

NEW YORK (CNNMoney.com) -- Stocks rallied Friday as investors cheered the Federal Reserve's decision to cut a little watched interest rate that helped soothe ongoing credit market worries.

The Dow Jones industrial average (up 210.70 to 13,056.48, Charts) gained about 230 points, or 1.8 percent, after soaring more than 300 points earlier in the session. The blue-chip average snapped a six-session losing streak.

The broader S&P 500 (up 32.71 to 1,443.98, Charts) climbed nearly 2.5 percent to end higher for the second straight session while the tech-fueled Nasdaq composite index (up 53.09 to 2,504.16, Charts) rose about 2.2 percent to close higher for the first time since last Wednesday.

For the week, the Dow, S&P and Nasdaq were all down slightly.

"A sense of calm has come over investors, supported by the actions of the Fed," said Art Hogan, chief market strategist at Jefferies & Co.

"Just knowing that the Fed is ready to assist is reassuring," Hogan said. Going forward, however, "we'll have to wait and see how the market reacts to the next piece of negative news," he added, referring to ongoing troubles with risky U.S. mortgages and the credit market.

"Volatility is going to be the norm for a while."

After a tumultuous week, all three major gauges jumped out of the gate on news that the Fed cut the discount rate, which the central bank charges qualified lenders - mainly banks - for temporary loans, by half a point to 5.75 percent, taking Wall Street by surprise.

The move, while largely symbolic, was an attempt by the central bank to "promote the restoration of orderly conditions in financial markets," the Fed said in a statement.

While the Fed did not cut its more closely watched Fed funds rate, the action did calm nervous investors who have been gripped by uncertainty about how hard the subprime mortgage and credit market problems would hit the broader economy.

Overseas, European markets finished sharply higher after the Fed discount rate cut. Mexican and Canadian markets were also higher. But Asian markets tumbled Friday, with Japan's Nikkei index skidding 5 percent, posting its worst day since the Sept. 11 attacks.

Here's what was moving near the close:

On the corporate front, the move provided a big lift to the financial sector. Shares of Wall Street banks Goldman Sachs (up $5.06 to $174.91, Charts, Fortune 500) and J.P. Morgan Chase (up $1.51 to $46.98, Charts, Fortune 500) climbed 2.5 percent and 4 percent respectively, while the AMEX Securities Broker/Dealer index (up $8.63 to $221.90, Charts) gained nearly 4 percent.

Even the troubled mortgage lender Countrywide Financial (up $2.42 to $21.37, Charts, Fortune 500) rebounded nicely from Thursday's losses on the news, climbing more than 11 percent.

Shares of organic grocer Wild Oats Markets (up $2.64 to $17.85, Charts) soared 18 percent after a bid by federal antitrust regulators to temporarily block its purchase by rival Whole Foods Market (up $3.23 to $44.40, Charts, Fortune 500) was rejected by a federal judge. But the FTC filed an appeal today on the decision.

Shares of oil majors including Exxon Mobil (up $3.63 to $84.30, Charts, Fortune 500), BP (up $1.77 to $64.77, Charts) and Chevron (up $3.37 to $84.76, Charts, Fortune 500) all rose more than 2 percent on higher crude prices, which were supported by the Fed's move and the growing strength of Hurricane Dean.

Light, sweet crude oil rose 78 cents to $71.78 a barrel on the New York Mercantile Exchange.

Early Friday morning, Midwest Express (up $0.85 to $15.55, Charts) accepted a raised $17-a-share offer from a group led by private equity firm TPG Capital and Northwest Airlines (up $0.07 to $16.05, Charts, Fortune 500), ending the hostile bid for the company by rival AirTran Holdings.

Dow component Hewlett-Packard (up $1.36 to $47.41, Charts, Fortune 500) reported better-than-expected earnings and issued a stronger-than-forecast outlook late Thursday, sending its shares about 2.5 percent higher.

Of the 30 stocks in the Dow, 25 rose and five fell.

Market breadth was positive. Winners beat losers on the New York Stock Exchange by 6 to 1 on volume of 2.5 billion shares. Advancers topped decliners by 3 to 1 on volume of 2.7 billion shares.

In economic news, consumer sentiment fell more than expected in August, according to a survey published Friday by the University of Michigan.

Short-term Treasury prices and the 10-year note were modestly higher with the yield on the benchmark note at 4.66, down from 4.67 percent late Thursday. Bond prices and yields move in opposite directions.

The dollar eased versus the euro and the yen.

COMEX gold for December jumped $8.80 to $666.80 an ounce.