Wall Street rally on rate cut; Dow up 420 points

Wall Street ran up their biggest one-day gains in more than five years following that interest rate cut. The rally was led by financials.

The Fed has lowered rates by 75 basis points or 0.75 percent, slightly lesser than what was expected. The interest rate now stands at 2.25%.

The US central bank has cut interest rates in a bid to restore confidence to nervous financial markets and boost the ailing economy. US Treasury Secretary Henry Paulson had admitted earlier on Tuesday that the US economy is facing a "sharp decline".

The Fed has lowered rates six times since September 2007 in a bid to boost the economy, which is reeling from the credit crisis triggered by a slump in the US housing market.

Shares of Goldman Sachs gained more than 16 percent and shares of Lehman Brothers surged over 45%. Shares of Bear Stearns also surged 22% after its JP Morgan buyout.

More money was pumped into the housing market as Fannie Mae and Freeddie Mac shares bounced back, with both stocks gaining more than 25 percent.

In economic news, wholesale prices rose 0.3 percent as expected. US homebuilding projects in February fell by 0.6 percent. Building permits, an indicator of future building activity, dropped 7.8 percent.

Dow added 420.41 points, or 3.51%, at 12,392.66. The Standard & Poor's 500 index gained 54.14 points, or 4.24%, at 1,330.74, and the Nasdaq composite index advanced 91.25 points, or 4.19%, to 2,268.26.

A look at how the Indian ADRs performed: