After yesterday’s Fed-inspired rally US futures pointed down this morning, signaling that Wall Street is by no means out of the woods yet.

S&P 500 futures shed 9.5 points to 1,324.50 and Nasdaq 100 futures fell 14 points to 1,757.00. Dow industrials dropped 93 points.

Yesterday, amid a dramatic day’s trading, the Dow industrials soared 420 points, while the broader S&P 500 added 54 points on anticipation of a further rate cut from the Fed and better-then-expected earnings from Wall Street banks Lehman Brothers and Goldman Sachs.

“European shares are down, reports the BBC, “despite Tuesday’s US interest rate cut, as worries remain over the credit crunch.”

UK banks were the worst hit. HBOS tumbled 17% before recovering, Royal Bank of Scotland was down 6% and Alliance and Leicester fell 5%.

“The Fed, because this is an election year, is trying to bail out the banking system,” according to an anonymous hedge fund manager quoted in The Daily Reckoning UK.

“Now, the people at the Fed aren’t morons, they know full well that they can’t prevent bank failures by simply lowering interest rates, that’s not going to work when the mortgage is underwater. So what they’re REALLY doing (though of course they can’t say that out loud for obvious reasons) is DEVALUING THE CURRENCY, so that in notional dollars, the prices of houses will go up.”

Amid stock-market turmoil Bill Bonner assesses his trade of the decade.
“Let’s look at how our Trade of the Decade is going. With only two more years to go…not bad! Gold was about $260 at the beginning of the decade. It’s now nearly 4 times that number.

“Stocks, as measured by the Dow, are only a bit below their peak set in 2000. But U.S. stocks generally are “officially” in a bear market, having lost 20% of their value from the peak. And measured in gold, stocks are down 72%. It took 43 ounces of gold to buy the Dow in early 2000. Now, it takes fewer than 12. Let’s see what the next 21 months bring.

“And if you’ve been wary about getting in on our Trade of the Decade, we have a unique opportunity for you. You can get gold out of the ground and into your portfolio – for a penny per ounce. No joke…and no shovel required.”

Find out more here.