US stocks ended a volatile session modestly higher yesterday after the Federal Reserve detailed a plan to breathe new life into the struggling economy.
Both the Dow and Nasdaq closed at levels not seen since 2008 while the S&P ended at a six-month high. The gains were preceded by an erratic session in which equities zigzagged up and down as the Fed announced a plan to buy $600 bn in Treasuries. The size of the plan was greater than had been anticipated but less than many hoped.
“The question is whether this is enough. The consensus was $500bn over the next six months or so. This is just a little bit ahead,” said Jeff Kleintop, chief market strategist at LPL Financial, Boston.
The S&P has risen about 14 per cent since the start of September as investors bet on the Fed’s action and Republican gains in Tuesday’s elections, two suppositions that came to pass and ended some of the market’s uncertainty.
The CBOE Volatility index, a favored gauge of investor anxiety, fell nine per cent after rising earlier. The change in direction “indicates... that traders feel the Fed support under the market remains firm and that we are likely to see higher highs in the stock benchmarks,” said Jon Najarian, a co-founder of web information site Optionmonster.com in Chicago.
Qualcomm rose 8.3 per cent to $49.49 in extended-trading after it reported fourth-quarter revenue that beat expectations.
Whole Foods Market rose 8 per cent to $44.34 after the market’s close on a higher-than-expected profit.
The Dow Jones industrial average was up 26.41 points, or 0.24 per cent, at 11,215.13. The Standard & Poor’s 500 Index was up 4.39 points, or 0.37 per cent, at 1,197.96. The Nasdaq Composite Index was up 6.75 points, or 0.27 per cent, at 2,540.27.
The Nasdaq ended at its highest since June 2008 while the Dow closed at its highest since September 2008. The S&P 500 closed at its best level in six months.
The Republicans’ strong gains in the election yesterday, including regaining control of the House and increasing their numbers in the Senate, would be more business friendly, investors said.