NEW YORK (CNNMoney.com) -- Stocks rallied Tuesday after the Federal Reserve cut a key short-term interest rate by a half-percentage point, reassuring investors that it was taking aggressive action amid the credit and mortgage market meltdown.
The Dow Jones industrial average jumped roughly 336 points, the biggest one-day point gain since Oct. 15, 2002, when the Dow added 378.28 points. On a percentage basis, the Dow added 2.5 percent, its best one-day gain since April 2, 2003, when it gained 2.67 percent.
The market responded with favor to this news, now it is a matter of how main street will respond. Smart people will not take this as an advantage to buy more, they will take it as an advantage to save more. Sooner or later that interest rate has to rise again. Saving money now, will give debtors more to draw from to pay the bills when they increase in the future with interest rates. Most people will probably spend more though, and cry when the rates rise in the future.
No comments:
Post a Comment