Stocks soared for the second consecutive session Wednesday, with the Dow industrials gaining more than 300 points, on expectations that the Federal Reserve (Fed) will continue to cut interest rates. The Fed's second-ranking official, Donald Kohn, said Wednesday that current financial conditions could warrant “offsetting” policy moves from the central bank, suggesting future interest-rate cuts. He said the Fed must be “nimble” and that it cannot risk a threat to the economy just to punish speculators. Wall Street welcomed Kohn's comments, with investors betting that it is more likely that the central bank will cut interest rates by at least a quarter-point when it meets on December 11. Also helping stocks was bargain hunting by investors, just two days after the market fell into the technical definition of a correction-the second time in 2007. Among the biggest gainers was the troubled financial sector. Shares of Wall Street's biggest banks, including Citigroup, Goldman Sachs, Merrill Lynch, and Morgan Stanley, were all sharply higher in afternoon trading. In economic news, the Fed said that the U.S. economy grew at a slower pace in the late autumn, as consumers and businesses felt the effects of the housing slump and tightening credit. Existing-home sales in October fell to a record low, the National Association of Realtors said. In a third report, the government reported a bigger-than-expected drop in durable-goods orders in October. Oil prices fell sharply for the second consecutive day on a smaller-than-expected decline in U.S. crude-oil and distillate supplies. Light sweet crude for January delivery plunged $3.80 to settle at $90.62 a barrel on the New York Mercantile Exchange. The Dow Jones industrial average rose 331.01, or 2.55 percent, to 13,289.45. The 30-stock index rose by as much as 366 points during the session. The broader Standard & Poor's 500 index rose 40.79, or 2.9 percent, to 1,469.02. The technology-heavy Nasdaq composite index led the day's advance, rising 82.11, or 3.2 percent, to 2,662.91. The New York Stock Exchange composite index rose 269.29 to 9,791.05. The American Stock Exchange composite index rose 57.50 to 2,353.94. And the Russell 2000 index rose 26.77 to 770.04.
