By Matt Wells
BBC News, New York
There is a sense of exhausted relief beginning to emerge on Wall Street, after yet another day of volatile markets, and frantic speculation.
Will the Fed cut be enough to improve sentiment on Wall Street?
Standing outside the grey headquarters of the Bear Stearns investment bank on Monday morning, and looking at the ashen faces of employees who had seen their savings disappear in a matter of days, the mood seemed irretrievably grim.
The proud investment bank - America's fifth biggest - survived the stock market crash of 1929, but the credit crunch brought it to its knees in a humiliating weekend buyout.
It looked as if the ripple effects of the sub-prime mortgage disaster were going to start eating into the whole banking sector on Monday, with markets dreading the following morning's profit figures from Lehman Brothers, and the Goldman Sachs Group.
The results early on Tuesday showed profits down by half, but that was better than many had feared. Then, the belief set in that the Federal Reserve - having already saved Bear Stearns - was going to slash rates by the biggest single margin since the 1980s.
After the opening bell on Wall Street, the arrows began pointing up on the financial network screens, and the mood went from black to a more positive green.
It was fitting perhaps that the revival in morale was led by the very dysfunctional sector that had been threatening to plunge the US economy into a deeper trough of despair.
Shares in Bear Stearns made up some lost ground
Even though the rate cut was not as deep as some hoped, it does leave wiggle room for further interest rate cuts, beyond the new rate of 2.25%.
The Dow Jones index initially fell 100 points on news of the 0.75% drop, but then cool heads realised that was still a pretty large gesture from the Fed. It rebounded back to finish nearly 400 up on the day.
And another promising indicator perhaps was the movement in shares of Bear Stearns itself.
Having lost more than 90% of its value in just a few dramatic days, the share price began the slow climb back from the paltry $2-per-share valuation of Monday morning.
The share options and pensions that many of its 14,000 employees had watched - in effect - evaporate over the weekend, will not be restored any time soon.
But the hope is now there that they may still have a future at the bank and its grand headquarters in midtown Manhattan, despite the new crisis ownership.
The Federal Reserve has taken its biggest gamble yet since the credit nightmare began months ago.
The dollar remains dangerously weak, and job cuts continue throughout an economy that just borrowed too much without any hope of paying it all back.
Nobody really knows when the vital confidence factor will return to the economy and the febrile markets.
Now, at least, there is a sense that a real corner may have been turned, although there will be no celebrating in the bars and restaurants of Manhattan. Wall Streeters will be wondering what the future has in store.