Stocks rise to highest level in 4 months
Stocks rose to their highest level in four months Monday as hopes grew for more action by the Federal Reserve to prop up the economy. The gains extended the market’s rally into a fourth consecutive week.
Buying accelerated after the Standard & Poor’s 500 index, the market measure most often used by professional traders, broke through the high end of its recent range. Technical analysts see that as a bullish sign.
The Dow Jones industrial average jumped 146 points to its highest close since May 13. An announcement from a group of economists declaring that the recession ended in June 2009 was a mild positive, but that assessment was in line with what many analysts already believed.
Deal news also helped lift shares. IBM Corp. said it would buy data-storage provider Netezza Corp. for about $1.7 billion in cash. Investors see acquisitions as a sign companies are more comfortable spending cash to expand and suggests that other stocks also may become targets for buyers.
The Fed meets today to discuss interest rates, and investors are hoping for a sign that the central bank might make more moves to keep rates low. There is a growing expectation that the Fed’s rate-setting committee could relaunch programs to buy Treasurys and mortgage bonds in an effort to stimulate the economy. At the very least, it might hint at future plans.
“The Fed will hint at it, put it on the table, but not do anything,” predicted Brian Gendreau, a market strategist at Financial Network Investment Corp.
A number of economic indicators have topped forecasts in recent weeks, propelling stocks higher, but the economy is far from strong. If the Fed starts buying bonds again, it could drive interest rates lower, enabling companies and consumers to get cheaper loans. The Fed had a similar bond-buying program in place earlier this year.
The Dow Jones industrial average rose 145.77 points, or 1.4 percent, to close at 10,753.62. The Dow has risen in 12 of the last 14 days.
The Standard & Poor’s 500 index rose 17.12, or 1.5 percent, to 1,142.71. The Nasdaq composite rose 40.22, or 1.7 percent, to 2,355.83.
The S&P 500 climbed solidly above the key technical level of 1,131, the high end of its recent trading range. The S&P briefly crossed that barrier Friday for the first time since June 21, but not for long enough to convince analysts that the market had enough momentum to surge higher.
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