Dow and S&P hit record highs after Fed decision

Earlier losses were gone in an instant as the Fed announced it would continue its stimulus, sending US shares surging to new highs.

By mid-afternoon in New York, the Dow was trading up 0.73% or 113 points at 15,642, while the S&P 500 climbed 0.91% to 1720.2.

A reduction in stimulus had been widely expected, but these forecasts were off the mark, as the Fed surprised the market by deciding to keep its monthly bond purchases intact. The statement issued by the Fed acknowledged that inflation has been running below target and that rising mortgage rates and fiscal cutbacks have been a drag on growth.

The Fed said that ‘the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market’ and that ‘the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases’.

The Fed will therefore continue to purchase $40 billion of mortgage-backed securities per month along with $45 billion of longer-term Treasuries per month.

The NASDAQ 100 rose along with the Dow and the S&P, advancing 1%. The index was helped by a 1.8% rise in Apple, the largest component in the index by capitalisation. The rise in Apple comes as iOS 7 becomes available and follows the first reviews of the new iPhones.

Oracle reports earnings after the close on Wall Street tonight, with earnings of 53 cents per share expected.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.