The futures market has decided that the odds of a three-quarter point rate cut lessened significantly today. Nevertheless, prices for future contracts still imply that traders are betting on a three-quarter point cut from the Fed, which would drop the key interest rate to 2.25%. Yesterday, bets were greater that the Fed would issue a harsher cut, dropping the interest rate to 2%. The rapid move in the futures market took place after the Fed announced a new temporary lending program, hoping to ease some of the credit issues hampering the current economy.

Yesterday, futures contracts had fully priced in a 75-basis point cut from the Fed, with odds for a cut to 2% (a full basis point) at roughly 14%. After this morning's announcement, the futures implied a 64-to-76% chance of a 75-basis point cut, with the 50-basis point cut now being fully priced in.

As we head into the final 2 hours of trading, the Dow (DJIA 11,987.2) continues to enjoy a gain of nearly 250 points thanks to the Fed's announcement. However, the Dow continues to battle overhead resistance at the 12,000 level. The S&P 500 Index (SPX 1,299.33) and the Nasdaq Composite (COMP 2,217.1) are both enjoying prosperous days as well.