Stocks Rocket After Fed Cuts Rates

The rumor mill turned out to be pretty accurate for once.

Stocks reversed steep losses Thursday on rumors of an emergency Federal Reserve meeting. Friday morning, the rumors turned out to be true when the Fed cut its rarely used discount rate, instead of the better known fed funds rate, sending stock futures soaring.

The major indexes ended the day about 2% higher after the symbolic Fed action raised hopes that damage from the subprime mortgage-fueled credit crunch can be limited.

HP gained 2.4% on a blowout earnings report, while Dell rose 1.5% after saying its long accounting nightmare may be drawing to a close.

BEA and AutoDesk were other earnings gainers.

Research in Motion was a big beneficiary of the stock rebound, soaring 11%.

E*Trade gained 7% after saying its mortgage business remains healthy.

The Nasdaq soared 54 to 2505, the S&P 500 surged 34 to 1445, and the Dow gained 233 to 13,079. Volume declined to 5.13 billion shares on the NYSE, and 2.62 billion on the Nasdaq. Advancing issues led by a 28-4 margin on the NYSE, and 22-8 on the Nasdaq. Upside volume was 90% on the NYSE, and 89% on the Nasdaq. New highs-new lows were 46-171 on the NYSE, and 69-147 on the Nasdaq.