'Big Rally' for Stocks to Continue, Jim Rogers Says (Carol Massar and Eric Martin)

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March 19 (Bloomberg) -- U.S. stocks, which surged the most in five years yesterday, will likely continue their rally this year because the ``out of control'' Federal Reserve is cutting interest rates to save investment banks from collapse, investor Jim Rogers said.

The Fed's support is ``why we're having a big rally, but that's not going to solve the problem,'' Rogers, chairman of Rogers Holdings and co-founder of the Quantum Hedge Fund with George Soros, said during an interview with Bloomberg Television from Singapore. ``The system is terribly corroded.''

The central bank is helping securities firms while delaying and deepening a bear market and recession, said Rogers, who is betting against financial shares. The Fed cut its benchmark for overnight lending between banks yesterday, continuing the most aggressive series of reductions since the rate became an explicit policy target in the late 1980s.

The Standard & Poor's 500 Index jumped 4.2 percent yesterday, the most since October 2002. The index this week dropped as much as 19.7 percent from its October record, nearing the 20 percent threshold of a bear market, following $195 billion in bank losses from the collapse of the subprime-mortgage market.