Federal Reserve intervenes and market soars

Kevin G. Hall | McClatchy Newspapers
last updated: March 11, 2008 09:45:04 PM

WASHINGTON — The Federal Reserve announced Tuesday that it will provide up to $200 billion in short-term loans, accepting a wide range of mortgage bonds as collateral in a bid to boost credit markets, keep housing finance alive and avoid a recession.

In a short statement, the Fed noted the increasing "pressures in some of these markets" and announced the new loans and a coordinated loan-financing effort with the central banks of Canada, England, Switzerland and the European Union.

Stocks, which had slumped over the past three sessions, soared throughout the day on news of the Fed's action. The Dow Jones Industrial Average closed up 416.66 points. The S&P 500 was up 47.28 and Nasdaq jumped 86.42 points.