Stocks, Treasurys Soar After Fed Keeps Stimulus - Somewhere in, United Kingdom
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Stocks, Treasurys Soar After Fed Keeps Stimulus - WSJ.com
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Please try again. Dow Jones Reprints: This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit www.djreprints.com Michelle Girard, RBS managing director and chief U.S. economist, joins the News Hub to gauge market reaction to the Federal Reserve's move to keep its $85-billion-a-month bond-buying program in place.Stocks soared to new highs Wednesday after investors embarked on a broad buying spree, propelled by a surprise decision by the Federal Reserve to keep its bond-purchase stimulus plan intact. U.S. Treasury bonds posted the biggest one-day price rally since November 2011, with the benchmark 10-year yield closing at 2.706%. Prices in the mortgage-backed securities market, where the Fed has been buying bonds, leapt even more.Many commodities also gained, with gold futures jumping 4.5% in late trading, while the dollar sank against the yen and euro, reflecting reduced investor expectations for U.S. interest-rate increases.View GraphicsFederal Reserve Chairman Ben Bernanke listens to a reporter's question during a news conference Wednesday."The first thought that came to mind was, 'Where's the taper?'" said Thomas Urano, a fixed-income portfolio manager at Sage Advisory. "Treasurys jumped, and I realized that's why I didn't see it. There wasn't one."The Dow Jones Industrial Average gained 147.21 points, or 0.9%, to 15676.94, an all-time closing high. The S&P 500 index rose 20.76 points, or 1.2%, to a new record of 1725.52. The Nasdaq Composite Index rose 37.94 points, or 1%, to 3783.64.With Wednesday's rally, the S&P is up 21% so far in 2013.The gains added to a strong advance in September, and came even as Wall Street wrestled with new questions about the strength of the U.S. recovery. The Federal Reserve cut its U.S. growth forecasts for 2013 and 2014. Among the best performers in Wednesday's advance were utilities and housing stocks, areas that benefit from continued low interest rates. Also gaining were overseas issues, particularly in Latin America, and the shares of companies dealing in raw materials."It's a big shock, and it's a massive green light for a risk-on party," said Benoit Anne, global head of emerging-market strategy at Société Générale.For months, many investors had been looking to this week's meeting of the Fed's policy-making committee as a likely turning point in the Fed's easy-money policies, which have played a major role in keeping interest rates low and fueling the stock market's rally. Most investors had been expecting the Fed to pull back on its monthly bond purchases-currently $85 billion-by between $10 billion and $15 billion.But Fed officials said they wanted more evidence of sustained improvement before making any moves."I'm surprised they didn't start to reduce bond purchases by a small amount," said Kate Warne, investment strategist with Edward Jones. "We figured they'd take a baby step rather than nothing at all."Still, investors noted the decision by the Fed to maintain its so-called quantitative easing efforts only postpones the inevitable pullback by the central bank. The Fed's next policy-making meeting is scheduled for the end of next month, and Fed Chairman Ben Bernanke said at his press conference Wednesday that a paring of stimulus could take place this year."Now we're back to this, where every [economic] report we're going to have to parse to see what the Fed thinks," said Marc Doss, San Diego-based regional chief investment officer with Wells Fargo Private Bank.For now, however, investors said the Fed's decision gives stocks the green light to push still further into record-high territory."You've got a trend that's up and a Fed that's in your corner, and you don't want to fight the Fed," said Rob Glownia, quantitative analyst at RiverFront Investment Group LLC, in Richmond, Va. A.C. Morgan, managing director in equities trading at UBS AG, said he saw buying by a diverse set of investors after the statement, and noted several of the big-picture issues that have troubled investors of late have fallen by the wayside.Enlarge Image"Syria, that's gone. Who's going to replace Bernanke? That's gone," he said. "And what's tapering going to look like? We don't have to worry about that right now."In the bond market, Wednesday's rally extended the benchmark 10-year note's winning streak into a sixth consecutive session. The buying sent the yield to the lowest level in more than a month. Bond prices rise when their yields fall.The benchmark 10-year note yield fell to as low as 2.671% during the afternoon trade, the lowest level since Aug. 13.Traders and investors that placed bearish bets on bond prices have scrambled to cover their sour bets after Lawrence Summers's announcement over the weekend that he was withdrawing from consideration to succeed Mr. Bernanke. Wednesday's Fed statement prompted such bets to unwind further, traders said. By covering short bets, these market participants buy back bonds, boosting bond prices and sending yields lower."The market was caught off guard" with the Fed's decision to stand pat, said Sean Simko, head of fixed income portfolio management at SEI Investments . "At this point the 10-year yield should be capped at 3%." Write to Alexandra Scaggs at alexandra.scaggs@dowjones.com, Min Zeng at min.zeng@wsj.com and Chris Dieterich at chris.dieterich@dowjones.com A version of this article appeared September 19, 2013, on page C1 in the U.S. edition of The Wall Street Journal, with the headline: Fed's Surprise Powers Market SurgeSteady Hand.Copyright 2012 Dow Jones & Company, Inc. All Rights ReservedThis copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. 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Please try again. Equities are tipped for a large gap higher this morning after the U.S. Federal Reserve's shock decision to confound market expectations and continue its monthly $85 billion asset-purchase plan. Australian private equity firm Next Capital plans to seek around 300 million Australian dollars (US$285 million) for its third fund, one of its founders said.The Carlyle Group LP and Australia's Seven Group Holdings Ltd. are refinancing around 1.8 billion Australian dollars (US$1.7 billion) of debt tied to Coates Hire, after failing to find a buyer for the equipment-leasing business.Content engaging our readers now, with additional prominence accorded if the story is rapidly gaining attention. Our WSJ algorithm comprises 30% page views, 20% Facebook, 20% Twitter, 20% email shares and 10% comments.Show 5 MoreShow Less Subscriber Content Read PreviewSubscriber Content Read PreviewSubscriber Content Read PreviewSubscriber Content Read PreviewSubscriber Content Read PreviewSeeing a more uneven economic climate than they expected and the potential for fiscal discord in Washington, Federal Reserve officials got cold feet Wednesday and decided to keep their signature easy-money program in place for the time being. Stocks soared to new highs after investors embarked on a broad buying spree, propelled by a surprise decision by the Federal Reserve to keep its bond-buying stimulus plan intact.Subscriber Content Read PreviewImmigration to the U.S. picked up last year-driven largely by growing numbers of newcomers from Asia rather than the Hispanic immigrants that fueled growth before the recession.When a public conflict arises between colleagues, the impact is often office-wide. But a blowup can be helpful if it speeds problem-solving. Subscriber Content Read PreviewSubscriber Content Read PreviewImmigration to the U.S. picked up last year-driven largely by growing numbers of newcomers from Asia rather than the Hispanic immigrants that fueled growth before the recession.Subscriber Content Read Preview Stocks soared to new highs Wednesday after investors embarked on a broad buying spree, propelled by a surprise decision by the Federal Reserve to keep its bond-purchase stimulus plan intact. U.S. Treasury bonds posted the biggest one-day price rally since November 2011, with the benchmark 10-year yield closing at 2.706%. Prices in the mortgage-backed securities market, where the Fed has been buying bonds, leapt even more. Many commodities also gained, with gold futures jumping 4.5% in late trading, while the dollar sank against the yen and euro, reflecting reduced investor expectations for U.S. interest-rate increases. "The first thought that came ...Real-time U.S. stock quotes reflect trades reported through Nasdaq only; comprehensive U.S. stock quotes reflect trading in all markets and are delayed at least 15 minutes. All quote volume is comprehensive and reflects trading in all markets, delayed at least 15 minutes. International stock quotes are delayed as per exchange requirements. Do we need religion to have ethics? Is it possible that a world without religion can be, on the whole, a better place to live? Do you agree with the Supreme Court's ruling on DOMA? What is the logic on how the WSJ prices subscription rates for renewals? Corliss Brown Motor Co Group Forge rum , maskinrum , pannrum , verkstad ånga och gasmotorer Would you support a tax on sugary drinks in your city? Subscriber Content Read PreviewYour question to the Journal Community Your comments on articles will show your real name and not a username.Why?Why use your real name? The Journal Community encourages thoughtful dialogue and meaningful connections between real people. We require the use of your full name to authenticate your identity. The quality of conversations can deteriorate when real identities are not provided.Create a Journal Community profile to avoid this message in the future. (As a member you agree to use your real name when participating in the Journal Community)Your participation access with Journal Community has been disabled due to violation of Journal Community Guidelines.If you feel you have reached this status change in error, please contact TBD@wsj.comSave to ↓ MoreSave ↓ MoreSaved ↓ MorePlease log in or register for free to use Save This.Name your new Collection and click save. Save ↓ More Save ↓ More Save ↓ More http://online.wsj.com/article/SB1000142 4127887323808204579083051848031492.html