While many investors were expecting the Fed to cut rates a full percentage point, they quickly overcame initial disappointment, especially since a 0.75 point cut is still substantial.
Asian stocks higher
Japan's benchmark Nikkei 225 index rose two per cent to 12,204.8 by early afternoon trading, while Hong Kong's Hang Seng index was up 2.7 per cent.
Australia's main index rose 3.6 per cent, and markets in South Korea, China and India were also sharply higher.
The dollar also rose against several main Asian currencies on Wednesday, trading just below the 100-yen level at 99.88 yen late on Wednesday morning.
It had fallen below 96 yen on Monday, its lowest in 12 1/2 years. But analysts warned that the advance doesn't mean the turmoil is over.
Tokyo's Nikkei index has tumbled about 20 per cent since the start of the year.
The Dow Jones industrial average soared 420 points, or 3.51, to 12,392.66 on Tuesday. That was its biggest one-day point gain in more than five years.'Challenging time'
The previous day, JP Morgan Chase bought Bear Stearns, a rival investment bank, for $2 per share, or less than $250 million.
That sparked concerns about the full extent of the credit crisis.
George Bush, the US president, acknowledged on Tuesday that it was a challenging time for the US economy, but said that the government would take further action if necessary.
"If there needs to be further action we'll take it in a way that does not damage the long-term health of our economy," he said at a speech about trade in Jacksonville, Florida.
Al Jazeera's John Terrett in New York said the success or failure of the policy prescriptions the Bush administration is using to "stimulate" the US economy will be determined many months from now.