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Wall Street rebounds on Fed's rate decision

08-10-2011 13:33 BJT Special Report:After S&P Downgrades U.S. Credit Rating |

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It was a wild session on Wall Street Tuesday, but stocks ultimately rallied as investors struggled to decipher the Fed's signals on the economy after a dizzying two-week slide.

Wall Street bounced back from a sharp two-week sell-off with the biggest one-day gain in more than two years.

But it was no easy feat as investors have a long list of worries to overcome.

And that's one of the reasons why the market will struggle despite today's solid rebound, says veteran New York Stock Exchange floor trader Ted Weisberg.

Traders work on the floor of New York Stock Exchange in New York, the United States, Aug. 9, 2011. The U.S. stocks surged in the last hour trading on Tuesday and nearly regained Monday's huge losses after the Federal Reserve decided to keep the ultra-low interest rate unchanged for at least two years. (Xinhua/Zhu Wei)

Ted said, "I think at the moment there are so many negatives out there that this is going to weigh on the market for the foreseeable future. Doesn't mean the markets aren't going to rally from here and it doesn't mean buyers won't come back, but after you get the kind of sell-off we've had it causes a lot of damage both real and psychological."

Investors also are trying to figure out Federal Reserve Chairman Ben Bernanke's strategy. The Fed held interest rates near zero and said rates are likely to stay near zero at least until mid-2013.

A television screen at the post of specialist Stephen Ruiz, left, displays the decision of the Federal Reserve, on the floor of the New York Stock Exchange Tuesday, Aug. 9, 2011. The Federal Reserve said Tuesday that it will likely keep interest rates at record lows for the next two years after acknowledging that the economy is weaker than it had thought and faces increasing risks. (AP Photo/Richard Drew)

Ted said, "I've never heard the Fed make that kind of projection before - ever - and I've been doing this for almost 50 years. And they basically tried to put a positive twist on it. But they told us that the economy is basically just not doing as well as they would like. So I don't think there was anything in the Fed statement that was terribly bullish or encouraging."

Which leaves one possible answer for the rally on the table - good old bargain hunting.

In the end - the Dow surged 429 points, a gain of 4 percent. The S&P 500 jumped 4.7 percent and the Nasdaq soared 5.3 percent.

A trader works on the floor of the New York Stock Exchange as he listens to an announcement
by the Fed in New York August 9, 2011. [Photo/Agencies]

But in a sign investors haven't totally ditched their fears:

Gold prices rose further - hitting a new record above 17-78.

Treasury yields tumbled as investors continued to snap-up government debt.

And oil fell to $79.30; its lowest close since September.

Meanwhile, stock markets rebounded across Europe, although Germany was little changed.

A trader works on the floor of New York Stock Exchange in New York, the United States, Aug. 9, 2011. (Xinhua/Zhu Wei)

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Editor:Li Wanran |Source: CNTV.CN

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