STOCKS in New York soared to fresh record highs last night after Federal Reserve chief Ben Bernanke assured investors that ultra-loose monetary policy is here to stay for the time being.
The Dow Jones spiked as soon as trading began yesterday, responding to Bernanke’s comments on Wednesday night. At 15,460.92, up 1.11 per cent on the day, it reached its highest close of all time.
The S&P 500 index was up even more sharply, gaining 1.36 per cent to also close at a record peak, of 1,675.02.
The S&P’s previous high of 1,669.16 was printed on 21 May of this year, while yesterday’s Dow surpassed its last high of 15,409.39 from 28 May.
Shares rose on this side of the pond too, the FTSE gaining 0.6 per cent and the German Dax up 1.14 per cent.
On Wednesday night Bernanke said that “highly accommodative policy is needed for the forseeable future,” easing trader concerns that the pace of the Fed’s quantitative easing programme (QE) could be slowed down – a prospect known as tapering.
Last month’s Fed minutes, along with Bernanke’s accompanying press conference, sparked fears that the organisation’s $85bn monthly asset purchases would be cut this year. Shares tumbled, yet have since sprung back due to reassurances over QE.
“The Fed once prided itself on the quality and clarity of its guidance regarding the future direction of US monetary policy,” said Jeremy Batstone-Carr of Charles Stanley yesterday. “That credibility has been severely tested in the wake of the confusion prevailing since the conclusion of the 19 June Open Markets Committee meeting.”