Bernanke Wields the Ax Again, Boosting Stocks and ETFs

January 30, 2008 at 12:00 pm by Tom Lydon

Ax Once again, the Federal Reserve stepped in and made a half-point rate cut, a move that Wall Street and exchange traded funds (ETFs) apparently liked.

The rate cut didn’t come as a complete surprise, as the stock market had been banking on it. They just weren’t sure if it would be the half-point cut, or a more cautious quarter-point, reports Madlen Read for the Associated Press. The move today puts the federal funds rate target at 3%, the lowest since June 2005, according to Mark Felsenthal for Reuters.

Once the cut was announced, the stock markets went positive: within minutes of the decision, the Dow Jones industrial average jumped more than 100 points at one point. The S&P 500 and Nasdaq also rose following the report.

It’s positive news, but between this latest cut and last week’s unexpected three-quarter point cut, will it be enough to rejuvenate the economy? Let’s wait and see.

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2 Comments For This Post

  1. Chacko Tharakan Says:

    Dear Mr Lydon,

    News item syas interest rate is cut by 0.75%. But nowhere it says what’s old rate or new rate. Then how will the reader know the rate?

  2. Tom Lydon Says:

    Chacko,

    This story refers to the rate cut in January, which left the interest rate at 3%. To find the most current rate, be sure to refer to the most recent story on the issue (http://www.etftrends.com/2008/04/economy-federal.html). In the link to the news story in that post, it is said that with the most recent cut, the rate is 2%.

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