Stock prices took their biggest jump in more than five years Tuesday after the Federal Reserve cut interest rates by a dramatic three-quarters of a percentage point and suggested more cuts could be coming.
In an 8-2 vote, Fed policymakers cut their target for short-term rates to 2.25%, the lowest in more than three years. The cut matched the most aggressive move since they began targeting the rate in 1990. The Fed has cut the rate from 5.25% since September.
Investors cheered. The Dow Jones industrial average rose 420 points, or 3.5%, the biggest point gain since July 2002.
President Bush, in a speech in Jacksonville, said the economy is in a "challenging time," but said the government had acted swiftly to aid struggling homeowners in passing a stimulus plan in February.