Fed Cuts Rate Half Point, Wall Street Soars

September 19 2007: 7:24 AM EDT
NEW YORK (CNNMoney.com) -- U.S. stock futures were stronger Wednesday as investors continued to cheer a Federal Reserve cut aimed at restoring confidence in the financial markets. At 7:20 a.m. ET, stocks appeared poised to open higher and extend the previous day's big advance. The Dow Jones industrial averaged surged about 336 points, or 2.5 percent, on Tuesday after the Fed cut the target on a key interest rate by half of a percentage point. Many on Wall Street had expected the Fed to be more cautious and lower rates by just a quarter of a percentage point. The bigger-than-expected cut lifted sentiment, as it signaled the central bank is prepared to act in order to keep the mortgage meltdown and credit crunch from derailing the economy. Peter Cardillo, chief market economist, Avalon Partners, said that he believes that stocks still have some room to climb Wednesday, even after Tuesday's rally. He said the expiration of options on Friday will force those who had taken short positions that bet on a market decline to buy shares to cover those position. "It looks like the party might be extended today," said Cardillo. In global trade, Japan's benchmark Nikkei index jumped more than 3 percent on the Fed cut. Major markets in Europe rallied in morning trading.