*Fed cuts; market drops

A three-quarter-percentage-point rate cut would be borderline radical most any other time, but the fact that the Fed stopped short of a full percentage point is clearly a disappointment on Wall Street (the Dow fell more than 100 points after the news broke but it's coming back). The fed funds rate (that's the rate at which banks lend to each other) was reduced from 3 percent to 2.25 percent, its lowest level since December 2004. Not that these cuts have done much good in stimulating the economy. Nor will they until banks start feeling comfortable about lending money again. More cuts appear in the offing. The Fed said growth risks remain and that it will act in a "timely" manner as needed, suggesting more rate cuts are probable barring an economic recovery. (WSJ, NYT)

*So much for being disappointed. Investors decided that the rate cut was just fine and the Dow wound up with a 420-point gain. "We’ve had a lot of characteristics of a bottom: A watershed event in Bear Stearns, a crescendo of bad news, aggressive action on the part of the Fed, excesses in bearish sentiment and today a strengthening of the weakest link (financials),” Steve Shobin, chief market strategist at AmeriCap Advisers, told Marketbeat. “I think the window of opportunity is open for a couple of months.” Others, of course, strongly disagree.