- Title: USA: Dow, S&P end at record highs after Fed trims stimulus
- Date: 18th December 2013
- Summary: CHICAGO, ILLINOIS, UNITED STATES (DECEMBER 18, 2013) (REUTERS) (SOUNDBITE) (English) JIM BIANCO, PRESIDENT, BIANCO RESEARCH, SAYING: "I think first of all, I don't think it really matters that much what they did. The fact is they did something. I have always said that the Fed could have tapered a dollar today and it would have had pretty much the same reaction. Because it's the beginning of the end. The Fed is now in the process of ending the program. And Bernanke said in his press conference today, it's reasonable to expect purchases are going to be at zero by next summer. And so that's what the market is going to price in and what they did today. Whether it's five billion, 10 billion, a dollar, 20 billion, it didn't really matter. We are going to start pricing in zero, zero purchases by about late summer of next year."
- Embargoed: 2nd January 2014 12:00
- Keywords:
- Location: Usa
- Country: USA
- Topics: Finance
- Reuters ID: LVA8ULIZD9AF4Y3O4BAGPPHRMZML
- Story Text: U.S. stocks staged an explosive rally on Wednesday (December 18), driving the Dow and the S&P 500 to all-time closing highs after the Federal Reserve announced it would start to unwind its historic stimulus.
While the Fed's move came as a surprise to many in the market, it put to rest the question of when the Fed would begin to scale back its bond-buying program and came as a relief for some investors, analysts said.
"I don't think it really matters that much what they did. The fact is they did something. I have always said that the Fed could have tapered a dollar today and it would have had pretty much the same reaction. Because it's the beginning of the end. The Fed is now in the process of ending the program. And Bernanke said in his press conference today, it's reasonable to expect purchases are going to be at zero by next summer. And so that's what the market is going to price in and what they did today. Whether it's five billion, 10 billion, a dollar, 20 billion, it didn't really matter. We are going to start pricing in zero, zero purchases by about late summer of next year," said Jim Bianco, President of Bianco Research in Chicago.
The central bank said it would reduce its monthly asset purchases by $10 billion (USD) to $75 billion, while it also indicated that its key interest rate would stay at rock bottom even longer than previously promised. It said it "likely will be appropriate" to keep overnight rates near zero "well past the time" that the U.S. jobless rate falls below 6.5 percent.
Yet the decision to move now rather than later pointed to better prospects for the U.S. economy and the labor market. It also marked a turning point for the largest monetary policy experiment ever.
Stocks extended losses just after the announcement, but quickly turned higher and began rallying. The day's move marked the biggest swing from the day's high to the low for the S&P 500 in two years. All 10 S&P 500 sector indexes ended higher, with all but information technology gaining more than 1 percent, and the S&P 500 financial index rising 2.4 percent.
The Dow Jones industrial average rose 292.71 points or 1.84 percent, to end at 16,167.97, a record closing high. The S&P 500 gained 29.65 points or 1.66 percent, to finish at 1,810.65, also a record closing high. The Nasdaq Composite added 46.384 points or 1.15 percent, to close at 4,070.064. - Copyright Holder: REUTERS
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