Stocks Rebound After Fed Adds Liquidity

NEW YORK (AP) _ Wall Street pared its losses Friday to trade flat after the Federal Reserve said it would do all it can to ``facilitate the orderly functioning of financial markets'' and twice

Friday, August 10th 2007, 9:40 am

By: News On 6

NEW YORK (AP) _ Wall Street pared its losses Friday to trade flat after the Federal Reserve said it would do all it can to ``facilitate the orderly functioning of financial markets'' and twice injected liquidity into the banking system.

The stock market, which has been gyrating for weeks over fears that credit is drying up, began to pare its losses several hours after the Fed's latest injection of cash into the system Friday. The day's declines, however, showed the depths of fear that have investors yanking money out of stocks.

The Fed added $16 billion in liquidity to the market at midmorning Friday, supplementing the $19 billion added earlier in the day.

Federal Reserve policy makers ``are trying to do everything they can short of cutting the federal funds rate'' to try to calm the markets, said Ed Yardeni, president of Yardeni Research in Great Neck, N.Y.

But, he said, ``I think they probably have to cut rates, and probably before their scheduled September meeting.''

He noted that it was Fed rate cuts that calmed the market after the 1998 Russian debt crisis and the implosion of the hedge fund Long-Term Capital Management.

In midday trading, the Dow Jones industrials rose 18.34, or 0.92 percent, to 13,148.34, after being down as much as 212 points. On Thursday, the Dow fell 387 points and extended a series of triple-digit moves that began in late July.

Friday's moves were typical of the zigzag trading and triple-digit moves in the Dow since the index closed at a record 14,000.41 on July 19. As of Thursday's close, the Dow was down about 730 points, or 5.2 percent, from its record close.

Broader stock indicators also turned positive Friday. The Standard & Poor's 500 index rose 8.55, or 0.59 percent, to 1,461.64, and the Nasdaq composite index rose 10.10, or 0.40 percent, to 2,566.59.