U.S. Stocks Rise to Record After Fed Plans Stimulus Cuts
Source: Bloomberg
U.S. stocks rose, sending benchmark indexes to all-time highs, after the Federal Reserve said it will reduce the pace of its monthly bond purchases and expressed confidence in the labor market recovery.
Homebuilders rallied after the Fed said it may hold interest rates near zero even if unemployment falls below the 6.5 percent rate the central bank previously cited as a likely catalyst for an increase. CVS Caremark Corp. jumped 4.3 percent after boosting its dividend. Jabil Circuit Inc. slumped 21 percent as earnings missed analysts’ estimates.
The Standard & Poor’s 500 Index (SPX) advanced 1.7 percent to 1,810.65 at 4 p.m. in New York, surpassing its previous record close reached on Dec. 9. The Dow Jones Industrial Average surged 292.71 points, or 1.8 percent, to an all-time high of 16,167.97. Both gauges posted their biggest gains in two months. About 8.1 billion shares changed hands on U.S. exchanges, the busiest trading since September.
“With the Fed acknowledging the economy continues to recover, and reiterating low rates and accommodative policy will remain for quite some time, it reinforces the Goldilocks scenario of a Fed backstop and equities are running with it,” Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., said in an interview. His firm oversees $290 billion.
Read more: http://www.bloomberg.com/news/2013-12-18/u-s-stock-index-futures-gain-before-fed-policy-decision.html
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