Intel Corp., JPMorgan Chase & Co. and Citigroup Inc. led declines in the Dow Jones Industrial Average, falling more than 4 percent. The central bank lowered its rate target by half a point to 1 percent, a level matching a half-century low, and said ``downside risks to growth remain.''
The Standard & Poor's 500 Index lost 10.42 points, or 1.1 percent, to 930.09, one day after surging 11 percent. The Dow average slumped 74.16, or 0.8 percent, to 8,990.96. Three stocks gained for every two that fell on the New York Stock Exchange.
The Fed has reduced the rate from 5.25 percent in the past 13 months and created six lending programs channeling more than $1 trillion into the financial system. The Commerce Department probably will report tomorrow that the economy shrank at a 0.5 percent annual rate in the third quarter, the most since the 2001 recession, economists predict.
U.S. stocks swung between gains and losses before the Fed decision as a decline in orders for U.S. durable goods excluding transportation offset prospects for lower borrowing costs.
Canadian stocks rose, with commodity shares leading the main index toward its biggest two-day gain in 33 years, as the Federal Reserve lowered borrowing costs to boost growth and the U.S. dollar weakened. The Standard & Poor's/TSX Composite Index rose 3.82 percent to 9,501.56 for a two-day gain of 12 percent, the steepest since 1973.
Brazilian stocks rose to the highest in a week on surging commodity prices and speculation the central bank may halt six months of interest-rate increases as the government prepares measures to help the nation's homebuilders. The Bovespa gained 1,458, or 4.37 percent.
Stocks gained in Europe and Asia for a second day as falling credit costs spurred a rally in financial shares, while higher commodity prices pushed up oil and metals producers.
U.K. stocks jumped, advancing for a second day, led by banks and commodity producers on speculation central banks will cut interest rates. The FTSE 100 Index gained 287.94, or 7.3 percent, to 4,214.32 at 3:24 p.m. in London, as all but six stocks advanced, trimming its decline for the month to 14 percent. The FTSE All- Share Index added 67 percent, while Ireland's ISEQ Index increased 7.4 percent.
Most German stocks advanced as investors speculated central banks may lower borrowing costs to spur economic growth, while a slump in Volkswagen AG weighed on the benchmark DAX Index. The benchmark DAX Index fell 42.09, or 0.9 percent, to 4,781.36 as of 3:53 p.m. in Frankfurt.
Japan's stocks surged a second day as speculation the Bank of Japan will cut rates spurred the yen's steepest drop in three decades, boosting earnings prospects for makers of cars and electronics. The Nikkei climbed 589.98, or 7.7 percent, to close at 8,211.90 in Tokyo, building on yesterday's 6.4 percent advance.
Australian stocks climbed, lifting the index from a four-year low, on speculation the global credit crunch will ease from a cut in U.S. interest rates later today, and after metal prices climbed for the second day. The S&P/ASX 200 Index rose 51 points, or 1.3 percent, to 3,845.60 at the close in Sydney, after a five-day slump dragged it to its lowest since Nov. 1, 2004.
China's stocks fell, driving the benchmark index lower, as concern profits will decline with a slowing economy overshadowed speculation the government will add measures to bolster equities. The CSI 300 Index, which tracks yuan-denominated stocks traded in Shanghai and Shenzhen, lost 47.60, or 2.8 percent, to 1,658.22 at the close, giving up a 1.5 percent gain.
India's Sensitive Index rose for a second day. Hindalco Industries Ltd., India's largest non-ferrous metals producer, surged 18 percent, its biggest advance in more than 16 years, after some investors judged the recent declines excessive.The benchmark Bombay Stock Exchange Sensitive Index, or Sensex, adde...