U.S. stocks rallied to record highs on Wednesday after the Federal Reserve surprised investors and decided against trimming its bond-buying stimulus program, which has fueled Wall Street’s rally of more than 20 percent this year.
The Standard Poor’s 500 Index was up 20.67 points, or 1.21 percent, at 1,725.43. The Dow Jones industrial average was up 146.44 points, or 0.94 percent, at 15,676.17, and the Nasdaq Composite Index was up 37.94 points, or 1.01 percent, at 3,783.64.
Most market participants were expecting the central bank to begin a withdrawal of the bond-buying program by about $10 billion a month.
The committee said it saw recent economic data “as consistent with growing underlying strength in the broader economy.” However, the statement continued, “The committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.”
Investors had been hesitant to make big bets ahead of what is expected to be the first tentative step by the Federal Reserve to wean the world off its stimulus program that has helped prop up the American economy and equity markets for much of the year.
Traders had generally expected the Fed’s Federal Open Market Committee to make modest cuts to its $85 billion in monthly asset buying, so the decision to keep the program intact, at least for now, came as a surprise.
Many equity options traders appear less worried by the Federal Reserve’s announcement than by Washington’s looming debt and budget battles. Hedges on volatility have been on the rise, but those bets do not look to be specifically tied to the Fed.
European shares were mostly higher, and the FTSEurofirst 300 closed up 0.4 percent, near a five-year closing high hit on Monday.
Markets in other kinds of assets were also suggesting that investors were not too worried about the Fed announcement. The dollar held near a four-week trough against a basket of major currencies on Wednesday, as investors bet that any move by the Federal Reserve to roll back stimulus would be modest.
Adobe Systems, known for its Photoshop and Acrobat software, said it expected subscriber growth to top the 331,000 it added in the third quarter because of strong demand from corporate customers. The stock was up 9.2 percent.
FedEx, the courier company, posted a bigger quarterly profit as it cut costs and its lower-priced ground shipping business did well, sending its shares up 6 percent.
This article has been revised to reflect the following correction:
Correction: September 18, 2013
Due to an editing error, an earlier version of this article misstated stocks’ gains in Wednesday’s stock rally. Stocks climbed about 1 percent during trading on Wednesday, not 20 percent. Federal Reserve policies have been credited with helping to fuel a 20 percent rally this year.
Article source: http://www.nytimes.com/2013/09/19/business/daily-stock-market-activity.html?partner=rss&emc=rss