FED CUTS FED FUNDS AND DISCOUNT RATES BY 50 BASIS POINTS -- FINANCIALS LEAD MARKET RALLY -- WEAK DOLLAR PUSHES GOLD TO RECORD HIGH
FED ALSO LOWERS THE DISCOUNT RATE... The Fed gave the market all it wanted and more. Not only did it lower the Fed funds rate by 50 basis points, it lowered the discount rate a similar amount. Not surprisingly, the stock market is reacting very favorably. The Dow is surging 250 points on the news. The S&P 500 is up more than 2%. Chart 2 shows the S&P trading at the highest level in nearly two months. Financial stocks are leading the day's gains. Charts 2 and 3 show bank and brokerage indexes trading over their 50-day averages. Gold is trading at a record high on a falling dollar. That's pushing the XAU Index to a new 52-week high. If the market gains hold through the close, today's positive action will turn its short-term trend upward. MORE AFTER THE CLOSE.
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