Wall Street rallies on Fed rate signals and oil retreat

NEW YORK - Stocks soared on Tuesday after the Federal Reserve signalled that it is in no rush to raise interest rates and oil prices tumbled further, spurring the Dow and the S&P to their best day in four months.

The Dow rose more than 300 points.

The Fed, as expected, left benchmark lending rates unchanged at 2 per cent, and its accompanying statement soothed investors who had worried that inflation headwinds would force the central bank to drive up borrowing costs in coming months.

Oil prices fell more than 2 per cent, closing below the US$120 a barrel mark for the first time in three months. That provided further relief on the inflation front and offered hope for consumer spending, which has been pressured by record gasoline prices.

Big winners on the day included retailers, banks and airlines, while commodity-related shares extended their retreat along with the drop in price of crude oil and gold.

The Dow Jones industrial average surged 331.21 points, or 2.94 per cent, to 11,615.36, while the Standard & Poor's 500 Index jumped 35.59 points, or 2.85 per cent, at 1,284.60.

The Nasdaq Composite Index rose 64.27 points, or 2.81 per cent, to 2,349.83.

Source: Singapore Business Times - 06 Aug 2008