Along with the Bank of Canada, the Bank of England, the European Central Bank, and the Swiss National Bank, the Federal Reserve announced measures it said are designed to address elevated pressures in short-term funding markets.
The Federal Reserve said that the measures include the establishment of a temporary term auction facility as well as the establishment of foreign exchange swap lines with the European Central Bank and the Swiss National Bank.
The news has inspired traders to go bargain hunting, but while stocks have shown particularly strong upward moves in morning trading, the major averages have thus far been unable to offset the steep losses that were posted in the previous session.
In overseas trading, the markets have turned in another mixed performance, as Asian stocks followed the U.S. markets lower while European stocks have shown a strong upward move on the news of the central banks' efforts to add liquidity.
After rising sharply following the interest rate cut on Tuesday, treasuries have moved back to the downside in morning trading. Subsequently, yields are rebounding after showing a steep decline in the previous session, with the 10-year yield currently up 15.5 basis points at 4.145 percent.
The major averages have moved roughly sideways in recent trading, holding onto substantial gains. The Dow is currently up 192.90 at 13,625.67, the Nasdaq is up 50.34 at 2,702.69 and the S&P 500 is up 25.44 at 1,503.09.
Following the broad based weakness that emerged in the previous session, a variety of sectors are showing strong moves back to the upside in morning trading on Wednesday. Housing stocks are turning in some of the market's best performances.
The standout gains by housing stocks are contributing to a 2.4 percent gain by the Philadelphia Housing Sector Index, which is moving back to the upside after ending Tuesday's trading down 7.6 percent. Centex (CTX | charts | news | PowerRating) and Beazer Homes (BZH | charts | news | PowerRating) are posting notable gains.
Steel and real estate stocks are also posting strong gains after seeing substantial weakness in the previous session, with the Amex Steel Index currently up 3.3 percent while the Morgan Stanley REIT Index is up 3 percent.
Significant strength is also visible in the telecommunications sector, which saw relatively limited weakness on Tuesday. The Amex Telecom Index is currently up 2.9 percent after reaching its best intraday level in over a month.
AT&T (T | charts | news | PowerRating) is helping to lead the sector higher, with the telecom giant currently up 5.7 percent after reaching a one-month intraday high. Shares of AT&T ended the previous session up 4.1 percent after raising its quarterly dividend announcing a new 400 million share buyback.
Energy stocks are also seeing considerable strength in morning trading, benefiting from a notable increase by the price of oil. Crude for January delivery is currently up $1.75 at $91.77 ahead of the release of the Energy Department's weekly report on oil inventories.
While the report is expected to show a continued decrease in crude oil inventories, gasoline and distillate fuel stockpiles are expected to increase compared to the previous week.
As mentioned above, most other sectors are also seeing considerable strength, with some networking, wireless, and brokerage stocks posting substantial gains. On the other hand, airline stocks are seeing modest weakness.
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