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Fed's Cut Flips Markets Upwards

But credit debacle undergirds even gains, analysts warn

By Kevin Spak,  Newser Staff

Posted Aug 17, 2007 4:46 PM CDT
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(Newser) – Markets surged upwards today after the Fed cut its discount rate, thanks to a flurry of short-covering aided by today's options expiration. The Dow was up for the first time in over a week, jumping 233.30 to close at 13079.08. But many experts warn that the rally could be short-lived, arguing that even big gains are the product of the volatility an uncertain credit market has bred.

The Nasdaq and S&P 500 also rose, up 53.96 and 34.76 respectively, as did many global markets. Financials led the charge—even embattled lender Countrywide was up 13%—but many still anticipate a key rate drop. “I don't think what the [Fed] did is really going to impact credit spreads,” said one analyst, “And it doesn't change existing problems.”

a half percentage point. (AP Photo/David Karp)
a half percentage point. (AP Photo/David Karp)   (Associated Press)
Traders and Specialists work the trading floor of the New York Stock Exchange, early Friday, Aug. 17, 2007. Stocks soared Friday, propelling the Dow Jones industrials up more than 180 points, after the Federal Reserve, acknowledging that the stock market's plunge posed a threat to the economy, slashed its discount...
Traders and Specialists work the trading floor of the New York Stock Exchange, early Friday, Aug. 17, 2007. Stocks soared Friday, propelling the Dow Jones industrials up more than 180 points, after the...   (Associated Press)
Investors monitor stock prices at a private stock market gallery in Kuala Lumpur, Malaysia, Friday, Aug. 17, 2007. The benchmark Kuala Lumpur Composite Index was down 30.13 points to 1,177.48 in the afternoon. (AP Photo/Lai Seng Sin)
Investors monitor stock prices at a private stock market gallery in Kuala Lumpur, Malaysia, Friday, Aug. 17, 2007. The benchmark Kuala Lumpur Composite Index was down 30.13 points to 1,177.48 in the...   (Associated Press)
Technician John Crawford is shown against the monitors in the TSX broadcast center just after the closing bell in Toronto, Thursday, Aug. 16, 2007. The Toronto stock market's long upward marathon had the wind knocked clean out of it Thursday as another big selloff sparked by credit fears battered the...
Technician John Crawford is shown against the monitors in the TSX broadcast center just after the closing bell in Toronto, Thursday, Aug. 16, 2007. The Toronto stock market's long upward marathon had...   (Associated Press)
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