The market rallied strongly on the Fed's announcement today and shot up about 2.5%. The Fed, chaired by Bernanke, cut rates by one half point surprising Wall Street which only expected a quarter point cut.
To excerpt the Feds announcement: "Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally. Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time."
The NYSE had volume of 3.6 billion shares with 3,013 shares advancing while 345 declined for a gain of 301.28 points to close at 9,909.03. On the NASDAQ, 2.1 billion shares traded, 2,359 advanced and 657 declined for a gain of 70.00 to 2,651.66.
Almost all stocks trading today were making gains. Some of the bigger gainers of the day include McGraw-Hill (NYSE: MHP) rising $4.29 (9%) to $52.10 on double digit growth expectations. Toll Brothers (NYSE: TOL) rose $1.81 (9%) to $22.72 on interest rate cuts. Sothebys (NYSE: BID) bid higher $3.38 (8%) to $45.82. Kroger Co (NYSE: KR) gained $2.07 (8%) to $29.09 after earnings. CIT Group (NYSE: CIT) rose $2.81 (7%) to $40.83.
Options like the genereral market were active. In options there were 6.4 million puts and 7.1 million calls traded for a put/call open interest ratio of 0.90. CBOE S&P 500 Volatility Index (NASDAQ: $VIX) dropped 6.13 to 20.35 a 23% drop. The VIX is referred to as the markets fear indicator and this is a huge move down as investors everywhere breath a huge sigh of relief. The Financial Sector SPDR ETF (NYSE: XLF) saw heavy volume on the September 34 calls (XLFIH) with over 114,900 options trading. Intel (NASDAQ: INTC) had some heavy volume on the September 25 calls (INQIE) with over 22,200 options trading. Visteon (NYSE: VC) saw heavy volume on the January 7.50 (calls (VCAU) with over 21,500 options trading.
Overall it was a great day on Wall Street as the Fed showed it was serious about financial stability in the market.
Kevin Kersten is an Options Analyst with InvestorsObserver.com. Disclosure note: Mr. Kersten owns and or controls a diversified portfolio of long and short positions that may include holdings in companies he writes about.
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