The Open Market Committee of the Federal Reserve stepped into the financial markets Friday and cut the primary credit discount facility, the interest rate charged to financial institutions for loans collateralized by nearly any package of securities, by 50 basis points to 5.75% and extended repayment terms from overnight to 30 days or more.

The action by the Fed immediately led to a turnaround in the equity futures markets, which soared on the news.

Perhaps as important as the cut itself was an acknowledgment by the Fed of the impact turmoil in the credit markets has had on markets since its reguarly monthly meeting two weeks ago, when it signaled that inflation was its primary concern. In a statement issued this morning, the Fed OMC said, "Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward. In these circumstances, although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably. The Committee is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets."

The stocks of the big public builders were poised to post gains on the news before market opening, with the Standard & Poor's Home Builders ETF priced up nearly 10% in pre-market trading.