A rally at the openStocks start higher as credit fears ease a bit, investors hope for Fed rate cut.NEW YORK (CNNMoney.com) -- Stocks opened sharply higher Wednesday as credit markets calmed down a bit and speculation grew on Wall Street that a Fed rate cut was coming, maybe soon. The Dow Jones industrials jumped about 100 points in the first 20 minutes of trading, a gain of about 0.8 percent. The broader S&P 500 index and the tech-heavy Nasdaq composite index each rallied about 1 percent.
The Wall Street Journal reported that many on Wall Street believe the Fed will have to cut interest rates sharply, perhaps in the next week or two, to help calm jittery financial markets. But the paper also said Fed officials would prefer to wait until their Sept. 18 meeting. In a survey of economists published Wednesday by USA Today, a majority expect a rate cut in September. A meeting Tuesday among Fed Chairman Ben Bernanke, Senate Banking Committee Chairman Christopher Dodd and Treasury Secretary Hank Paulson fueled the expectations for a Fed rate cut. That meeting helped stabilize money markets Tuesday. Meanwhile, Treasury prices fell in another sign that investors are less nervous than earlier in the week. The 10-year note slipped nearly half a point, raising its yield to 4.65 percent from 4.59 percent late Tuesday. Yields on three-month bills also rose. Bond prices and yields move in opposite directions. Credit worries also eased overseas. Most markets in Asia headed higher, although Japan's Nikkei finished the session slightly lower. European stocks rose in the early going. The dollar edged lower against the euro but rose versus the yen. Oil prices rebounded in early trading ahead of a government reading on fuel inventories, after a sell-off Tuesday took the price below $70 a barrel. U.S. light crude added 31 cents to $69.88 a barrel in electronic trading. Companies in the news included Toll Brothers (Charts, Fortune 500), Medtronic (Charts, Fortune 500), online brokers TD Ameritrade (Charts) and E*Trade Financial (Charts) and MGM Mirage (Charts, Fortune 500). |
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