At just before 2 pm in New York, Wall Street was in positive territory for the day, helped by the Fed‘s cut in the discount rate.

Most analysts now expect that the Fed will cut the benchmark interest rate when it meets in September, while some investors hope they do it even sooner than that.

Some analysts said that if the cut in the discount rate returns confidence to the markets, the Fed might not need to cut the benchmark rate, but the Fed’s move on the discount rate was seen as evidence that the Fed is prepared to act if the markets don’t become more stable soon.

The Dow Jones Industrial Average was 1.25 percent higher to 13,006.49, while the Nasdaq Composite had added 1.67 percent to 2,491.92 and the S&P 500 was up 1.88 percent to 1,437.77.

Mortgage lender Countrywide Financial (NYSE: CFC), which saw big declines on Thursday after drawing down a multi-billion dollar credit line to be able to stay in operation, was up $2.23 in afternoon trade on Friday to $21.18.

Banks were also higher.

Citigroup (NYSE: C) had gained $1.57 to $49.12, while Bank of America (NYSE: BAC) added $1.88 to $51.73 and Goldman Sachs (NYSE: GS) was $3.98 higher to $173.83.

Housebuilder DR Horton (NYSE: DHI) was also higher, adding 63 cents to $16.54 after Thursday’s data on new home construction came in lower than expected for July.

The telecommunications sector was mixed. Verizon Communications (NYSE: VZ) was 11 cents higher to $40.34 and Qwest Communications (NYSE: Q) had gained 22 cents to $8.94, but Sprint-Nextel (NSYE: S) was trading even at $18.20 and Alcatel-Lucent (NYSE: ALU) had dropped 6 cents to $10.53.

Results were also mixed in the pharmaceuticals sector.

Pfizer (NYSE: PFE) was 53 cents higher to $23.92, but Merck (NYSE: MRK) was down 11 cents to $49.35 while Bristol-Myers Squibb had dropped 27 cents to $27.10.

Wall Street saw gains at midday on Tuesday, with the Dow Jones Industrial Average up 0.35 percent to 12,520.91, the Nasdaq Composite 0.41 percent higher to 2,441.12, and the S&P 500 adding 0.34 percent to 1,427.75. The Russell 2000 index of small-caps was up even more, gaining 1.01 percent to 785.82. Volume at mid-session was at 712.8 million shares.

The banking sector was mixed. Bank of America was 40 cents lower to $53.25 even though it said its loan business was up and that its purchase of credit-card company MNBA helped profit in the fourth quarter. Wachovia was up , but only by 4 cents to $56.3 even though issued a better than anticipated report.

In the oil sector, higher prices due to forecasts of colder weather sent Chevron up 97 cents to $72.21, while ExxonMobil gained $1.12 to $74.03 and ConocoPhillips added $1.41 to $64.78.

Telecommunications equipment makers saw declines. Tellabs was 4 cents lower to $10.06, while Alcatel-Lucent fell $1.17 to $13.03. Alcatel-Lucent blamed its inability to make a profit in its first quarter after consolidation on integration costs and weak sales.

In the semiconductors sector, Texas Instruments added $1.17 to $29.76 on a positive quarterly report and several broker upgrades.

Even though it reached analysts’ expectations, chemicals company DuPont dropped $1.23 to $48.87 on concerns about the higher cost of raw materials.