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Stocks closed with monthly gains after the Federal Reserve’s interest-rate decision, offering Wall Street just what it had been clamoring for, a quarter-point cut to 4.5%. However, the statement by the Feds implied that it was done cutting rates for the time being.

The Dow Jones industrial average closed up 137.54 or 1.00% to 13,930.01, the broader S&P 500 closed up 18.36 or 1.20% to 1,549.38, and the tech-fueled Nasdaq composite closed up 42.41 or 1.51% to 2,859.12. For the month, the Dow gained 0.2%, the S&P rose 1.5%, and the Nasdaq climbed 5.5%.

Market breadth was positive. On the New York Stock Exchange, winners beat losers nearly by almost three to one on volume of 1.6 billion shares. On the Nasdaq, advancers topped two to one on volume of 2.5 billion shares.

At the conclusion of their two-day policy meeting, the Feds cut the rate by a quarter-percentage point to 4.50%. This was in line with forecasts and helped loosen up the credit markets and protect the economy from the impact of the housing market collapse. However, the statement was a little more hawkish than what most people expected, as they signaled more than once in the statement that they pretty much are done for now.

A strong reading on GDP growth and the day’s other positive news seemed to overshadow any potential concerns about record oil prices and the plunging dollar. The economy grew at a 3.9% annual rate in the third quarter, against the expected 3.15 by economist. The employment cost index, rose a smaller-than-expected 0.8% in the third quarter. The Chicago PMI fell to 49.7 in October, from 54.2 in September.

Shares of Google closed up $12.23 or 1.76% to $707.00, topped $700 for the first time ever. Analyst belief that as long as Google continues to extend its lead in search over Yahoo and Microsoft, it will keep climbing higher and higher. Google is partnering with companies such as Clear Channel and Dish on extending its automated ad buying system to radio and television.

Stock of Commerce Group closed up $5.37 or 17.26% to $36.49, after it stated that it would be acquired by Spain’s Mapfre S.A. for $2.21 billion, or $36.70 a share.

Shares of MasterCard closed up $32.76 or 20.85% to $189.91, after it said third-quarter net income jumped 63% due in part to an asset sale and higher consumer spending. Its quarterly profit rose to $314.5 million, from $193 million in the year-ago period. Its revenue climbed 20% to $1.08 billion from $902 million.

Stock of Alcatel-Lucent SA, closed up $0.30 or 3.19% to $ 9.69, after stating that it will cut a further 4,000 jobs and replace its CFO as part of a turnaround plan. This will help save an extra $577 million by the end of 2009. It reported a net loss of 258 million euros, against a profit of 532 million euros a year earlier. Revenue fell 11% year-over-year to 4.35 billion euros.

U.S. light crude oil for December delivery briefly hit a record high of $94.69 a barrel on the New York Mercantile Exchange, before pulling back a bit. Oil prices had already risen after the government’s weekly report showed a surprise drop in crude inventories, but the gains accelerated after the Fed announcement.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter