Stocks rallied the most in four years and gold jumped to a 27-year high as the Fed slashed interest rates and raised hopes amid a protracted housing slump and credit turmoil.

Lehman Brothers, Cummins Inc. and Moody's Corp. led gains in the Standard & Poor's 500 Index after the Fed dropped interest rates by half a point to 4.75 percent on Tuesday, the first cut in nearly four years.

The market responded by pushing the S&P 500 to its biggest percentage gain since March 2003, and

four-hundred ninety stocks in the index gained, the broadest advance since at least 1996, according to Bloomberg data.

Citigroup and JPMorgan Chase were among the largest gainers, jumping about 5 percent each. Banks typically benefit from a drop in short-term rates.

The Dow Jones industrial average jumped 335.97 points, or 2.51 percent, to end at 13,739.39 on Tuesday.

The Standard & Poor's 500 Index surged 43.13 points, or 2.92 percent, to finish at 1,519.78 while the Nasdaq Composite Index gained 70.00 points, or 2.71 percent, to close at 2,651.66.

Gold futures rose to a 27-year high on speculation the Fed's action will send the dollar down further.

Gold futures for December delivery jumped $11.70, or 1.6 percent, to $735.50 during Tuesday's session on the New York Mercantile Exchange. It is the highest price for active contracts since 1980.

The benchmark federal funds rate now stands at 4.75 percent, its lowest level since May of last year.

Oil stocks also rose sharply, as crude oil futures hit a fresh record high above $81 a barrel. Exxon Mobil Corp. gained 2.8 percent to $91.76 and was the second top-weighted gainer in the S&P.

On the Nasdaq, Adobe Systems gained 1.5 percent to $43.71 after the software maker's quarterly results beat Wall Street's estimates in a report released after Monday's closing bell.

The Nasdaq traded about 2.13 billion shares, above last year's daily average of 2.02 billion.