Stocks Rise After Fed Move to Grease Credit

Stocks rose Tuesday after the U.S. Federal Reserve announced a major step to help support strained commercial-paper markets.

As speculated, the central bank said it was creating a special facilityto help the $1.7 trillion commercial paper market. The Commercial Paper Funding Facility will buy unsecured and asset-backed commercial paper directly from eligible issuers.

"Terrific news," Gordon Charlop, of Rosenblatt Securities, said of the Fed announcement. " Frees up money markets. If you just look around at some of the valuations ... book value versus earnings, there seems like there's some opportunities here."

Some traders said there are signs that we may be nearing a bottom and that it’s a good time to start following Warren Buffett’s lead and dabbling in the market.

“There are signs,” said Scott Redler, chief strategic officer at “Investors should be putting money to work now month over month – not take your money out if you need it for the next five years,” Redler said. (CNBC’s Jim Cramer has taken a lot of heat for his advice yesterday on the “Today Show” that if you need money for the next five years, take it out of stocks now .)

“I feel very confident that if they put a long-term plan together and start buying S&P 500 funds, maybe even the ETF MOO the agricultural stocks that have been crushed … I think that they can make money in the long term,” Redler said.

The Dow plunged as much as 800 points on Monday before a late comeback pared losses. But the benchmark index still ended below 10,000 for the first time in four year.

Shares in Asia were mixed. Japan shed 3 percent, but markets closing later received a boost after Australia unexpectedly cut rates by a full percentage point. That led to speculation that central banks across the globe are preparing a coordinated set of rate cuts.

And European markets were mixed in morning trading. The Aussie rate cut lent support to the major indexes early on, but then a wave of selling in three major UK banks put investors back on the defensive.

Royal Bank of Scotland sank more than 30 percent, while Lloyds TSB and Barclays lost more than 10 percent after the BBC reported that all three banks had sounded out the UK finance minister for public funds.

Lloyds declined to comment to CNBC, while a Barclays spokesman told Reuters the bank had "categorically not" requested any funds from the UK government.

Earnings Season Starts with Little Fanfare

Traditionally investors would be focused on Alcoa results -- due after the bell with analysts expecting a slight decline in profit -- which traditionally kick off earnings season.

But banks are even stealing the earnings spotlight, with Bank of Americareporting a 68 percent decline in profit after the bell Monday.

Bank of America shares fell 10 percent.

Advanced Micro Devices shot up more than 25 percent after the chip maker announced that it would spin off its manufacturing business into a joint venturewith Abu Dhabi-backed Advanced Technology Investment.

Fed Chairman Ben Bernanke is expected to speak at 1:15 p.m. ET and the Fed is slated to release minutes from its last meeting at 2 p.m. At 3 p.m. is a report on consumer credit.

This Week:

TUESDAY: Bernanke, Stern speak; Fed minutes; consumer credit; Earnings season kicks off with Alcoa, Yum Brands; Second presidential debate
WEDNESDAY: Weekly mortgage applications; Fed's Plosser speaks; Pending-home sales; Weekly crude inventories; Earnings from Costco, Monsanto and Ruby Tuesday
THURSDAY: Retailers report Sept. sales; Bank of England announcement; Weekly jobless claims; Wholesale trade; Natural-gas inventories; Fed's Stern speaks; Earnings from Chevron
FRIDAY: Import/export prices; Trade gap; Treasury budget; Earnings from GE