Wall Street catches fire as Fed lowers key rate
The stock market soared in heavy trading early Monday as interest rates began to fall after the Federal Reserve eased credit. The Dow Jones industrial average surged almost 20 points on Friday, and had increased another 10 points by late Monday morning.
Analysts said the rally was triggered by the Fed action late Friday in reducing the discount rate it charges member banks for loans to 13 percent, from 14 percent.
Because of the Fed's slash, Citibank, Marine Midland, Morgan Guaranty Trust Company, First National Bank of Chicago, and Mellon Bank of Pittsburgh lowered their prime rates to 171/2 percent, from 18 percent. Other banks were expected to follow.
Several analysts said the prime rate, which reached a near-record 201/2 percent earlier this year, would likely drop to 17 percent shortly and could slide to around 15 percent by year's end if the economy kept slumping.