Fed Cut Sees Stocks Continue to Rise
After the Federal Reserve cut interest rates a half-percentage point, stocks rose on Tuesday and continue their rally on Wednesday, this despite news of Morgan Stanley’s net income drop.
The Dow Jones Industrial Average rose 58.04 to 13797.43. The S&P 500 gained 9.97 to 1529.75, and the Nasdaq Composite Index added 19.03 to 2670.69.
In addition, shares of Fannie Mae and Freddie Mac soared after the regulator for the two mortgage finance companies said it will provide the companies with more flexibility to manage their investment portfolios.
The Office of Federal Housing Enterprise Oversight (OFHEO) reversed a decision last month to retain a cap on Washington-based Fannie Mae and Mclean, Virginia-based Freddie Mac, which was imposed while the companies resolved $11.3 billion of accounting misstatements.
Fannie Mae and Freddie Mac, which own or guarantee 40 percent of U.S. home loans, have pushed to be allowed to buy more home loans and securities to fill a gap left by buyers who fled the market. OFHEO Director James B. Lockhart and President Bush said last month that the companies needed to reform their accounting before the limits would be increased.
“These changes will make it easier for the Enterprises to manage market-based fluctuations in their portfolios and reduce the need to keep large cushions below the portfolio caps,'' Lockhart said today in an e-mailed statement.
Published on September 19, 2007
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