WALL Street is growing more encouraged about the potential benefits of lower borrowing costs yesterday, tacking gains onto the enormous rally from a day earlier as investors await the Federal Reserve's decision on interest rates.
The market expects policymakers to lower the fed funds rate, which stands at 1.5 percent, by a half point or three-quarters of a point, though there has been speculation that smaller or wider cuts are possible. The decision is due at 2:15 p.m. EDT (1815 GMT).
The only certainty is that Wall Street will pore over the Fed's statement on its decision and its reading of the economy. That assessment, along with any move on rates themselves, could lead the market to retreat, rally or simply shrug off a move that it writes off as expected.
Stocks began the session fluctuating but then saw larger advances that added to the 889-point surge logged by the Dow Jones industrials Tuesday. The Dow and the Standard & Poor's 500 index posted gains of nearly 11 percent, while the Nasdaq composite index rose 9.5 percent as investors, confident about the prospects for a rate cut, piled into the market to pick up stocks that have become bargains.
The Dow's gain was its second-largest daily point gain the biggest was its 936-point surge on October13 that later evaporated as fears about the economy grew. The stock market has been extremely volatile lately, beyond a simple case of investor indecision, the market's back-and-forth moves may also be part of its attempt to establish a bottom.
In midday trading, the Dow rose 86.57, or 0.95 percent, to 9,151.69 after falling in earlier trading.
Broader stock indicators also advanced. The S&P 500 index rose 7.62, or 0.81 percent, to 948.13, and the Nasdaq composite index rose 14.60, or 0.89 percent, to 1,664.07.
The Russell 2000 index of smaller companies rose 1.59, or 7.69 percent, to 490.24.
Advancers outnumbered decliners by about 2 to 1 on low volume of 617.4 million shares on the New York Stock Exchange.
The dollar weakened ahead of a possible rate cut. That slide helped drive commodity prices higher, as many are priced in dollars. Light, sweet crude rose US$5.55 to US$68.28 a barrel on the New York Mercantile Exchange.