So where to now for markets?
Gold, oil and copper kicked higher on Friday in the wake of the Fed's intervention, and oil is going to rise even further with Hurricane Dean threatening the Gulf Coast and evacuations already taking place from offshore oil facilities.
Every major commodity in the major indexes (such as the CRB) rose, with the exception of cocoa.
The higher commodity prices and that 233 point rise in the Dow and strong finishes elsewhere should help today.
The Share Price Index is pointing 200 points or so higher but it could all fade away if there's another poor announcement from somewhere.
But the AMP's Dr Shane Oliver says that with the Fed now pulling out all stops in order to head off a credit crunch; it's looking increasingly likely that we have seen the bottom in share markets.
"I was looking for around a 15% decline in markets, and we are now pretty close to that depending on the market.
"More importantly the panic selling in various markets over the last week is indicative of the sort of wash out often seen at or around market bottoms.
"That said the ride is likely to remain volatile over the next few weeks, and shares may even retest the lows of the last week at some point, as uncertainty continues and US growth weakens. The return to normal functioning in credit markets and a decent rebound in share markets is likely to require further Fed interest rate cuts.
"Share markets seem to be closely following the pattern followed around the LTCM crisis of July to October 1998, albeit it's all happening a bit faster this time around.
"More fundamentally, our broad view remains that the current turmoil in share markets is just another bull market correction and that shares will rebound strongly in the December quarter.
"The Australian and global economies are in good shape, and US weakness is offset by strength elsewhere. Inflation and interest rates remain relatively low, and are now falling in the US.
"Share valuations are now very attractive, and the corporate sector is solid, with low gearing and reasonable profit growth.
"As a result shares are expected to experience strong returns on a six to 12 month horizon. It's worth noting that since 1989 and ignoring the current fall there have been 11 falls in Australian shares greater than 10%. In eight of those, the market had totally recovered and moved on to new highs within five months.
"Bond yields are likely to range trade. And the plunge in the $A is likely to reverse once the dust settles in share and credit markets.
"Commodity prices are likely to remain high and Australia's high interest rates remain supportive of the $A. The plunge in Japanese export stocks is telling us that the latest unwinding of the so-called carry trade-resulting in a rising Yen/falling $A – won't be sustained."
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Friday saw oil, copper and gold rise after the Fed's move, as did the stockmarkets.
Stocks in Europe rose as well. Yields on three-month US Treasury bill yields rose because the need for government debt as a safe haven diminished, and the dollar fell against the euro for the first time in a week.
The Standard & Poor's 500 rose 34.67 or 2.5% Friday to close at 1,445.94, the Dow increased 233.3, or 1.8% to 13,079.08 and NASDAQ gained 53.96, or 2.2% to 2,505.03.
Europe's Dow Jones Stoxx Index rallied 2.2 percent after falling as much as 1% before the Fed cut. Markets rose in all 18 western European markets except Austria. The UK's FTSE 100 added 3.5%, France's CAC 40 rose 1.9% and Germany's DAX 1.5%.
But the rally on Friday was not enough to prevent the major US share indexes from finishing down on the week.
The Dow shed 1.2%, the S & P 500 fell 0.5% and the NASDAQ fell 1.6%.
For the year the Dow is up 4.9%, the S&P almost 2% and the NASDAQ 3.7%. The S&P had shed all its 2007 gains Wednesday and Thursday.
In Australia the All Ords lost 4.9% to end at 5965.2 and the ASX 200 lost more than 5% to close at 5671 points. The overall market is now officially 'corrected' here and is 10% off its peaks last month for both major indexes.
Nymex September crude rose 98 USc, to $US71.98 a barrel, three months copper jumped $US270 or 4% to $7,010 a tonne on the LME (on New York Comex copper was up 5.65USc to $314.750c/lb) and gold rose $US8.80 to $US666.80 an ounce.
Silver also rose, adding 30.5 USc, or around 2.7%, to $US11.80 an ounce.
Nickel rose, tin was a touch higher, lead and zinc rose, as did aluminium.
But Bloomberg had a couple of reminders from metals analysts that these may be short-lived.
It quoted Prospector Asset Management as saying:
"This is a short-term fix and the only question is: how long will it last,'' he said. “In my opinion, it may last for two or three days.''
And David Threlkeld, a metals trader who is president of Resolved Inc. in Scottsdale, Arizona, said prices will decline.
"We have over-inflated everything. Metals are overpriced by at least 100 percent, except maybe aluminum,'' said Threlkeld, who has traded metals for 40 years.
He said metals "have the same problems as in the subprime market. The metals markets are poised to go through the same circumstances.''
