tocks rose yesterday, with the Dow Jones and the S&P 500 closing at new all-time highs as Federal Reserve officials’ comments eased some concerns that the central bank could start reducing its stimulus program.
Dow component Home Depot gave the market a lift after the world’s largest home improvement chain raised its profit outlook, driving its stock to a record intraday high.
JP Morgan also bolstered the Dow, rising more than one per cent to a 52-week high after the bank’s chief executive Jamie Dimon won a vote of confidence from shareholders.
Stocks extended gains in afternoon trade after New York Fed president William Dudley said he cannot be sure whether policymakers will next reduce or increase the amount of purchases, due to the uncertain economic outlook.
Earlier, James Bullard, president of the Federal Reserve Bank of St. Louis, had urged the European Central Bank to consider employing a US-style quantitative easing programme to counter slowing inflation and recession in the Eurozone.
“There’s been increasing concerns that the time has come for the Fed to take some of the stimulus out of this market, especially with stocks at these levels. What we heard from the Fed officials today gave a temporary additional shot to the market,” said Rick Meckler, president of hedge fund LibertyView Capital Management in New Jersey.
“But there is only so much you can move from the low interest-rate policy," Meckler said. “It has got to translate into economic news or earnings news and that's why the market has remained largely unchanged.”
The Fed’s latest $85bn bond buying programme has played a significant role in the market’s rally.