Stocks climb after Fed pledges to hold rates low
The stock market continued its slow and steady advance of the past month after the
The Dow Jones industrial average rose 50 points in afternoon trading for its seventh straight advance. The gain means the Dow has joined the Standard & Poor’s 500 index and
The latest climb came from the Fed’s decision Tuesay to hold its key lending rate at a record low of essentially zero. A government report that prices at the wholesale level fell by the biggest amount in seven months added to confidence that inflation is contained. That would enable policymakers to keep rates low.
The Labor Department’s Producer Price Index fell 0.6 percent in February, its steepest drop in seven months. Economists polled by Thomson Reuters forecast a drop of 0.2 percent. A drop in energy prices helped push the index lower.
The report was the latest bit of news to build confidence about the economy. It’s clear that investors are feeling more upbeat. Since Feb. 8, the Dow is up 7.9 percent. That’s a big gain that might ordinarily take a year to assemble but the Dow had slumped 7.6 percent in the month before that so a rebound isn’t surprising.
Analysts are focusing not on the size of the gain but the way the market is climbing: in almost a stairstep pattern. The Dow hasn’t swung by more than 100 points in 11 of the past 13 trading days.
The more modest advances signal that investors aren’t getting overconfident.
“This market is behaving just the way you like to see,” said James Meyer, chief investment officer at Tower Bridge Advisors in Conshohocken, Pa.
Meyer said investors are cautious but relieved as big problems like unemployment and housing appear to be getting better, even if the improvement is slow. Most reports signal that the economy is recovering. The occasional bursts of good news have helped overshadow some of the more downbeat economic numbers.
The steady climb continued Wednesday. In early afternoon trading, the Dow rose 51.85, or 0.5 percent, to 10,737.83. The Dow traded above its recent closing high of 10,725.43 from Jan. 19 and is at its highest level since Oct. 1, 2008.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.65 percent from 3.66 percent late Tuesday.
The dollar fell against other major currencies. Gold prices rose.
Crude oil rose 61 cents to $82.31 per barrel on the New York Mercantile Exchange.
More than two stocks rose for every one that fell on the
The Russell 2000 index of smaller companies rose 4.71, or 0.7 percent, to 684.29.