US stocks shot up on Tuesday after US Federal Reserve slashed benchmark interest rate to a record low and vowed to use "all available tools" to counter a deepening recession.

The Dow Jones Industrial Average surged 359.61 points or 4.2% to finish at 8,924.14. The S&P 500 climbed 44.61 points or 5.14% to 913.18. The Nasdaq Composite leaped 81.55 points or 5.41% to 1,589.89.

In a historic move, US Federal Reserve slashed federal funds rate, at which banks lend to one another, to a range of 0 percent to 0.25 percent. The Fed noted that "labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment and industrial production have declined. Financial markets remain quite strained and credit conditions tight."The Fed vowed to use "all available tools" to counter a deepening recession. In a statement it said, "The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price."  "The committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time," the statement added.

Shares of financials skyrocketed. J.P Morgan (NYSE: JPM) rallied $3.72 or 12.99% to $32.35. Citigroup jumped 80 cents or 10.81% to $8.23. Bank of America Corp. (NYSE: BAC) increased 99 cents or 7.02% to $15.10.
Goldman Sachs (NYSE: GS) gained $9.54 or 14.35% to $76.The firm posted a fourth quarter net loss of $2.12 billion or $4.97 a share compared to profit of $3.22 billion $7.01 a share a year ago. The company's net revenue was negative $1.58 billion in the three months ended Nov. 28, compared with positive $10.74 billion a year earlier in the same period. Street analysts were expecting Goldman Sachs to post a loss of $1.63 billion, or $3.73 a share on revenue of $932 million in the fiscal fourth-quarter."Our results for the fourth quarter reflect extraordinarily difficult operating conditions, including a sharp decline in values across virtually every asset class,"  Goldman Sachs Chairman and Chief Executive Officer Lloyd C. Blankfein said in a statement. "

Morgan Stanley (NYSE: MS) rose $2.49 or 18.26% to $16.13.The company is due to announce its quarterly results on Wednesday.

Insurance stocks shot up. MetLife Inc. (NYSE: MET) added $5.04 or 17.15% to close at $34.43. Hartford Financial (NYSE: HIG) and Prudential Financial Inc. (NYSE: PRU) jumped over 20%.

Technology and services conglomerate, General Electric Co. (NYSE: GE) on Tuesday reaffirmed its 2008 earnings guidance and said it expects to earn $1.78 per share and $1.84 per share this year. The company also said it will stick to its annual dividend of $1.24 in 2009.