Updated from 9:13 a.m. EDT

U.S. stocks opened mixed and were fluctuating wildly Wednesday after the Federal Reserve authorized a 50-basis point reduction in the fed funds rate.

The rate cut, which was coordinated with a rate cut by the European Central bank as well as lenders in Britain, Canada, Sweden and Switzerland, marks a significant step in efforts to stem a global economic slowdown and free up constrained credit markets. The Fed's rate cut reduces the target interest rate to 1.5%. The ECB reduced its key rate half a point to 3.75%, and the Bank of England cut rates 50 basis points to 4.5%.

Lately, the major indices were registering gains. The Dow Jones Industrial Average was lately up 44 points to 9491, and the S&P 500 was up 9 points at 1005. The Nasdaq gained 26 points to 1781.

Robert Pavlik, chief investment officer at Oaktree Asset Management, said that the rate cut will have a positive effect on markets, but that it's going to be partially psychological, giving hope and confidence to consumers by reducing some of their costs.

Pavlik also said there's skepticism about the real effects of the cut, and that was evident in the selloff in premarket futures. "I think the market is more focused on what's going on in the Libor rates," he said. He said that the rate cut wasn't done to reduce lending rates among banks, but designed to offer a psychological boost.

Debt markets have not shown an immediate reaction to the coordinated rate cut, said Mary Ann Hurley, vice president of fixed-income trading at D.A. Davidson. "At this point, it looks minimal," she said, pointing out that one-week Libor remains high at 4.51%, and one-month Libor is at 4.29%.

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