US stocks jumped at one of their fastest rates in four years last night after the Federal Reserve slashed interest rates and raised hopes the economy could ride out a prolonged housing slump and turmoil in the credit market.
The cut in the Fed's benchmark short-term rate, the first in four years, was more aggressive than many investors had expected. The market responded by pushing the S&P 500 to its biggest percentage gain since March 2003.
It was the blue-chip Dow average's best one-day percentage gain since 2003.
Even before the rate cut was announced, Lehman Brothers Holdings reported unexpectedly strong earnings that helped allay worries about the impact of credit market contraction on banks. Its shares jumped 10 per cent to $64.49.
The biggest banking companies, whose profits usually benefit from a drop in short-term rates, were among top gainers.
