NEW YORK -- U.S. stock futures climbed Friday, erasing an early decline after the Federal Reserve approved a half percentage point cut in its discount rate on loans to banks.
Investors reacted after the Fed cut the discount rate to 5.75 percent, down from 6.25 percent despite the central bank's declaration that "downside risks" to the economy have increased appreciably.
Stock futures rebounded from earlier declines in premarket trading.
The Fed did not change its target for the more important federal funds rate, which has remained at 5.25 percent for more than a year. That is the rate on overnight loans between banks.
Dow futures expiring in September jumped 146, or 1.36 percent, to 13,120, while S&P 500 futures climbed 17.80, or 1.25 percent, to 1,442.30. Nasdaq 100 index futures rose 31.75, or 1.71 percent, to 1,888.25.
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Major European indexes also recovered. Britain's FTSE 100 rose 1.54 percent, Germany's DAX index rose 1.38 percent. France's CAC-40 was up 2.06 percent.
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