Exchange traded funds (ETFs) stocks celebrated on news from the Federal Reserve today. For the first time in four years, the Fed cut a key interest rate by an aggressive half-point, from 5.25% to 4.75%, reports Martin Crutsinger for the Associated Press. The strong reduction came as a surprise to many economists who expected a cut of a quarter-point.
The intervention is to prevent the diseased housing market and rocky financial markets from pulling the overall economy into a recession. Commercial banks are expected to match the Fed’s action by cutting their prime lending rate that has been at 8.25% for the past 15 years. The news sent the S&P 500, stocks and ETFs on a large rally.
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