Markets hit 2010 highs
NEW YORK — The Federal Reserve wanted to push interest rates lower and jump-start financial markets with its $600 billion economic stimulus plan. So far the Fed is getting the results it wants.
Long-term interest rates sank and stocks indexes hit new highs Thursday, a day after the Fed announced its massive bond-buying plan. The Dow Jones industrial average soared more than 220 points, reaching another high for the year. All three main stock indexes have now reached 2010 highs this week.
After five straight days of gains, the Dow Jones industrial average returned to levels last seen in early September 2008, before the collapse of Lehman Brothers and the worst days of the financial crisis.
“Much of today’s gains comes as a result of the government pumping money into the market,” said Joe Kinahan, the chief derivatives strategist at TD Ameritrade.
The dollar fell against other currencies as traders anticipated lower U.S. interest rates because of the Fed’s bond-buying program. Crude oil, gold and other commodities rose.
The Dow rose 219.71 points, or 2.0 percent, to close at 11,434.84. The broader S&P 500 index rose 23.10 points, or 1.9 percent, to 1,221.06, and the technology-heavy Nasdaq composite gained 37.07 points, or 1.5 percent to 2,577.34.
On Wednesday, the Federal Reserve announced it plans to buy $600 billion in bonds in an effort to spur spending and ultimately lower the unemployment rate.
The Fed’s plan will increase the supply of dollars held by banks and most likely push the value of the currency down.
Five stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 5.8 billion shares.
