US stocks surge as Federal Reserve cuts rates by 0.75 points
March 19, 2008
The US Federal Reserve (Fed) cut today its federal funds rate by a quarter of a percentage point, giving a boost to US stock markets. The federal funds rate — the interest that banks charge each other — is now down to 2.25%, the lowest point since late 2004.
A few minutes after the announcement, the Dow Jones Industrial Average fell 100 points but soared by 400 points within the next hour. It had been up more than 300 points prior to the announcement after investment banks Lehman Brothers and Goldman Sachs reported better-than-expected results for the first quarter. The market welcomed the development and ignored the issue of the collapse of Bear Stearns, another investment bank, which was bought by JP Morgan Chase & Co early this week.
US stock markets are expected to close higher today, so expect an upsurge in the Philippine stock market as well when it opens a few hours from now.
It remains to be seen, however, if investors will maintain their position or cash in the profits before retiring for the long holiday. The Philippine Stock Exchange is closed until Friday in commemoration of the Christian tradition of Holy Week. Trading resumes on Monday, March 24.