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Market Rallies With Fed's Interest Rate Announcement

By Amy Zimmer | August 9, 2011 9:01pm
Traders look on at the New York Stock Exchange moments after the Federal Reserve made its policy announcement on Aug. 9. The Fed announced it would keep interest rates low through at least 2013.
Traders look on at the New York Stock Exchange moments after the Federal Reserve made its policy announcement on Aug. 9. The Fed announced it would keep interest rates low through at least 2013.
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Mario Tama/Getty Images

MANHATTAN — A day after stocks plummeted 634 points, Wall Street perked up and finished Tuesday with a 429-point gain — or 4 percent.

It was a roller coaster of a day following the plunge on Monday, when markets first reopened after Standard & Poor's downgrade of the country's credit rating.

Tuesday's uphill ride came after the Federal Reserve guaranteed to keep interest rates near zero through 2013 — the first time the Fed made such a move tying rates to a specific date, reports said.

Stocks rose initially on Tuesday after the Fed's statement, but the big rally happened quickly, just before closing, according to the Associated Press. The Dow Jones industrial average was still down with less than an hour of trading to go when things took a wild turn that erased much of Monday's decline.

"This is unprecedented for the Fed to indicate they are ready to keep rates low for two more years," Mark Zandi, chief economist at Moody's Analytics told the AP.