Markets recouped initial losses of and made a strong comeback
after the Federal Reserve provided assurances that it would keep
interest rates near zero until late 2014.The Dow hit its highest
levels since May last year, while a robust earnings report from
Apple propelled Nasdaq to a finish in the green.
The Dow Jones Industrial Average (DJI) gained 0.6% to close at
12,756.96. The Standard & Poor 500 (S&P 500) moved up 0.9%
to finish yesterday's trading session at 1,326.06. The tech-laden
Nasdaq Composite Index inched up 1.1% and settled at 2,818.31. The
fear-gauge CBOE Volatility Index (VIX) dropped 3.2% and closed at
18.31. For 74% of the advancing stocks on the New York Stock
Exchange (NYSE), 23% of the stocks moved down. The remaining 3%
stocks were left unchanged. Total volume on the NYSE was 1.71
billion shares.
Benchmarks have been hovering around 5-month highs for the past
few days and the Dow posted its highest closing levels since May
2011. The blue-chip index had been trading lower in the initial
trading hours, before the central bank provided the impetus. It was
a decent performance by the blue-chip index by the end of the day
and only six of its 30 components ended lower. Stocks including
Alcoa Inc. (NYSE:
AA
), Caterpillar, Inc. (NYSE:
CAT
), E.I. du Pont de Nemours (NYSE:
DD
), The Travelers Companies, Inc. (NYSE:
TRV
) were up 2.0%, 2.6%, 2.4% and 2.0%, respectively, and led the
gains for the Dow.
The Federal Open Market Committee provided good news for
investors, as the central bank announced that it would keep
interest rate at record lows, or near zero, at least until 2014.The
Fed extended its earlier decision to keep the rates low until 2013,
and the move is surely to stimulate spending amidst low interest
rates.
Meanwhile, the central bank did not announce any new monetary
measures, but the Fed chairman Ben Bernanke said that "expanding
the balance sheet certainly remains an option", and Federal Reserve
will consider it "very seriously if, in particular, progress
towards full employment was -- continued or became more inadequate,
or if inflation remained exceptionally low". Some strategists
believe that it might be too early to announce an additional
simulative policy while Operation Twist is still in place. However,
Bernanke also dwelt on lingering European concerns and said: "We
continue to see headwinds emanating from Europe, coming from the
slowing global economy…"I don't think we're ready to declare that
we've entered a new, stronger phase at this point. We'll continue
to look at the data".
On the earnings front, the limelight was squarely on Apple Inc.
(NASDAQ:
AAPL
), which reported a robust first quarter after the closing bell on
Tuesday following which the company's shares jumped 6.2%. Earnings
per share sky-rocketed 115.7% and revenues soared 73.3%. The
tech-giant also surpassed the Street's estimates. However, another
tech bellwether, Yahoo! Inc.'s (NASDAQ:
YHOO
) quarterly results were modest, though it managed to beat
expectations. The company's shares dropped 0.8%. Meanwhile, United
Technologies Corporation (NYSE:
UTX
) and The Boeing Company (NYSE:
BA
) both managed to beat the Street's estimates.
The National Association of Realtors released data on pending
home sales, which declined in December after posting a 19-month
high in November. NAR reported that The Pending Home Sales Index
dropped 3.5% to 96.6 in December from November's figure of 100.1.
However the index is above the December 2010 figure. Chief
Economist of NAR, Lawrence Yun, said: "Even with a modest decline,
the preceding two months of contract activity are the highest in
the past four years outside of the homebuyer tax credit
period".
ALCOA INC (
AA
): Free Stock Analysis Report
APPLE INC (
AAPL
): Free Stock Analysis Report
BOEING CO (
BA
): Free Stock Analysis Report
CATERPILLAR INC (
CAT
): Free Stock Analysis Report
DU PONT (
EI
) DE (DD): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis Report
UTD TECHS CORP (UTX): Free Stock Analysis
Report
YAHOO! INC (YHOO): Free Stock Analysis Report
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