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Stocks soar as Fed boosts lendingMajor indexes spike on news that the Fed is joining with four other central banks to take measures to support short-term lending.NEW YORK (CNNMoney.com) -- U.S. stocks jumped in early trading Wednesday as the Federal Reserve announced that it was participating in a global effort to combat the credit crunch. The Dow Jones industrial average (Charts) gained 1.5 percent, while the broader S&P 500 (Charts) index added 1.8 percent and the tech-fueled Nasdaq (Charts) composite also climbed 1.8 percent. Before the markets opened, the Fed said it was trying to stoke short-term lending by coordinating a response with the central banks of Europe, Canada, Britain and Switzerland. It said it is creating a temporary credit facility that banks could tap to make loans to individuals and businesses. Stocks tumbled Tuesday after the central bank cut its key short-term interest rate by a quarter of a point, disappointing investors who had hoped for a half of a percentage point cut. In economic news, the U.S. trade deficit grew in October compared to the previous month, according to the government's latest reading that showed the gap between imports and exports was slightly larger than Wall Street expectations. Exxon Mobil (Charts, Fortune 500) said late Tuesday that it plans to build a floating liquefied natural gas terminal off the coast of New Jersey, sending its stock price down in Frankfurt trading. General Electric (Charts, Fortune 500) announced late Tuesday that it expects 2008 profits of $2.42 per share, slightly below analysts' forecasts. Bank of America (Charts, Fortune 500) said in a regulatory filing that its fourth-quarter writedowns of collateralized debt obligations will be greater than the $3 billion it estimated a month ago. Strong sectors Wednesday include homebuilding, telecom, commercial real estate and health care. Market breadth was positive. On the New York Stock Exchange, winners led losers four to one on volume of 300,000 shares. On the Nasdaq, advancers edged decliners by three to one on volume of 400,000 shares. Treasury prices fell substantially Wednesday, raising the yield on the baseline 10-year note to 4.15 percent. In currency trading, the dollar fell against the euro and rose against the yen. U.S. light crude oil for January delivery rose $1.03 to $91.05 a barrel on the New York Mercantile Exchange. |
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