Stocks still higher

The Russell 2000 (NYSE: IWM) and the Dow have trimmed their gains but are still in positive territory following news that four major U.S. banks borrowed money from the U.S. Federal Reserve. At 2:15 p.m. the small-cap index had added 7.76 points, or 0.98%, to 796.14. The Dow Jones Industrial Average (INDU) had climbed 97.31 points, or 0.74%, to 13,188.17.

Citigroup Inc. (NYSE: C) announced this afternoon that it has borrowed $500 million directly from the Fed.

The New York-based financial services giant, a Dow component, said that it is borrowing the funds “on behalf of clients.”  It became the first to take advantage of the Fed’s lower discount rate, which was dropped to 5.75% from 6.25% on Friday to encourage banks to borrow money and inject it into the financial markets.

The discount rate is the interest rate the U.S. central bank charges commercial banks on loans they receive.

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