What did Wall Street know and when did they know it?

Judging from Jim Cramer's antics, this was a crazy August settlement day. A lot of shorts needed to cover their position. At about 1pm on Thursday, August 16 the financial sector, which had been hard hit over the last month, began to rise in unison. This morning, the Fed announced a 50bp cut of the discount rate, a largely symbolic action but one that provided a lot of comfort to the market, in anticipation of federal funds rate cuts in September and/or October. At least one blog has questioned whether there were rumors of the rate cut yesterday afternoon and who received the rumors. Was this leak selectively received by well connected hedge fund operators, who drove up the market covering their shorts? While this helped the average investor (such as myself) who is long in the market, why should anyone get this kind of advantage, especially when the shorts are already so far in the black?