CHESSNOID

NEW YORK (CNNMoney.com) — The Federal Reserve, reacting to concerns about the subprime lending crisis that have rocked financial markets in recent weeks, Friday cut its so-called discount rate half a percentage point, to 5.75 percent.The discount rate, the rate the Federal Reserve charges qualified lenders, mainly banks, for temporary loans, is largely symbolic. The central bank did not change its more closely watched federal funds rate, which affects credit cards, home equity lines of credit, car loans and other consumer loan rates. That rate remains at 5.25 percent.

It is actually good to see the Feds actually react to the housing crisis on hand. It looks like they want to avoid the Hurricane Katrina of the financial markets on their watch. Good for them and good for the market. This is not a solution to the problem but it does instill new confidence by investors that their investment funds will not continue to shrink. The Dow surged 300 points at the open but has come down by more than half. There are sellers who just want out and they are selling into the market to minimize the week’s loss. At the end of the day, we can see if we have more sellers or buyers based on what these averages end at. I am cheering for the buyers.