NEW YORK—Stocks spiked Thursday after investor hopes for Federal Reserve stimulus were fulfilled.
After trading relatively flat for much of the morning, the Dow Jones Industrial Average leapt in the moments after the Fed announcement, jumping 90 points, or 0.7%, to 13423. The Standard & Poor's 500-stock index gained 11 points, or 0.7%, to 1447, and the Nasdaq Composite gained 24 points, or 0.8%, to 3138.
The Fed announced a major round of bond-buying for mortgage-backed securities Thursday, another unconventional effort to bolster the U.S. economy. Fed Chairman Ben Bernanke will have an afternoon news conference to discuss the central bank's decision.
"The [Fed]'s commitment seems fairly open-ended," said Dan Greenhaus, chief global strategist at BTIG LLC…
Keep reading: Dow Spikes as Investors Cheer Fed Action – WSJ.com.
Comment by Barry Ritholtz,
As we continue reading, it's noteworthy that this $40 large is on top of the existing twist operations of $45 billion per month til the end of the year. That’s $85 billion per month in September, October, November and December.
Those of you who insisted that September was too close to the election for more Fed action, here is some humble pie for you.
I want to see clarification as to whether this is truly open-ended (it appears to be). That is potentially a significant upgrade to liquidity, a bold spark for equities, Gold and commodities.
Full blog post: QE Wheeeeeee!