NEW YORK (AP) — A jubilant Wall Street barreled higher Tuesday after the Federal Reserve cut its benchmark interest rate by a larger-than-expected half percentage point. The Dow Jones industrial average reacted by surging 335 points — its biggest one-day point jump in nearly five years.

Although some investors hoped for a rate cut of that magnitude, most were betting on a smaller, quarter-point cut in the federal funds rate.

The Fed lowered the benchmark fed funds rate to 4.75 percent after keeping it unchanged for more than a year and not lowering the rate since 2003.

It also reduced the discount rate — what it charges banks borrowing from its discount window — by a half percentage point to 5.25 percent.

The central bank's decision and the wording of its accompanying economic assessment gratified a market that plunged during August amid fears that credit market tightness, spawned by a continuum of mortgage defaults and delinquencies, would send the economy toward recession.

The Dow soared 335.97, or 2.51 percent, to 13,739.39. The last time it rose more than 300 points in one session was Oct. 15, 2002, when it gained 378 points, and Tuesday's percent increase was the biggest since April 2, 2003. The blue-chip index is now only about 1.9 percent below its record close of 14,000.41, reached in mid-July.

The Standard & Poor's 500 index rose 43.13, or 2.92 percent, to 1,519.78. The Nasdaq composite index gained 70.00, or 2.71 percent, to 2,651.66. The S&P and the Nasdaq had their largest point gains since July 29, 2002.

Small-cap stocks, badly beaten during the market's summer turmoil, shot higher. The Russell 2000 index surged 30.82, or 3.97 percent, to 806.63, the largest percentage gain since July 29, 2002.

Shorter-term Treasury issues rose and longer-term bonds fell. The yield on the benchmark 10-year Treasury note finished at 4.47 percent, the same as late Monday.

Meanwhile, the dollar tumbled to a new all-time low against the euro after the rate cut because lower rates make a currency a less attractive investment. Crude oil futures catapulted further into record terrain, rising 94 cents to $81.51 a barrel, and gold prices rallied to a multidecade high.