Hopes over QE see stocks gain for a third day

US STOCKS climbed for a third straight day yesterday after comments from several Federal Reserve officials soothed concerns that the central bank would begin to reduce its stimulus efforts in the near future.

The Dow Jones industrial average closed back above 15,000 for the first time since 19 June. The Dow scored its third consecutive day of triple-digit point gains for the first time since 4-6 October 2011.

The rally helped the S&P 500 post its best three-day run since January after three Fed policymakers sought to downplay the notion that the central bank would bring an imminent end to its accommodative monetary policy known as quantitative easing.

But William Dudley, president of the Federal Reserve Bank of New York, said last night that the Fed’s asset purchases would be more aggressive than the timeline Bernanke had outlined if US economic growth and the labour market prove weaker than expected.

Dudley stressed that slowing the pace of the Fed’s bond buying would depend not on calendar dates but on the economic outlook, which remained unclear.

And Atlanta Federal Reserve Bank president Dennis Lockhart echoed Dudley’s comments, saying the pace of the Fed’s purchases remained contingent on evolving economic conditions.

The Dow Jones Industrial Average rose 114.35 points or 0.77 per cent, to end at 15,024.49. The S&P 500 gained 9.94 points or 0.62 per cent, to finish at 1,613.20.

The Nasdaq Composite added 25.64 points or 0.76 per cent, to close at 3,401.86.