Stocks soared this morning, propelling the Dow Jones industrial average up more than 300 points in the first few minutes of trading, after the Federal Reserve Board, acknowledging that the stock market’s plunge posed a threat to the economy, slashed its discount rate by a half percentage point, the Associated Press reported.

The central bank’s step gave the market a boost after weeks of losses fueled by turmoil in the credit markets. The Fed has poured billions of dollars in additional liquidity into the banking system in recent days, but today’s rate cut marked its most dramatic effort yet to alleviate fears about tightening credit and calm the global financial markets.

The Fed cut the discount rate to 5.75 percent from 6.25 percent, declaring that “downside risks” to the economy have increased appreciably.

However, the central bank did not change its target for the federal funds rate, which has remained at 5.25 percent for more than a year. Many analysts believes the market won’t settle down until the Federal Open Market Committee lowers the fed funds rate – the rate banks charge each other on overnight loans. The discount rate only covers loans the Fed makes to banks.