Stocks have shown a notable move to the upside in afternoon trading on Thursday, as traders have reacted positively to the Federal Reserve's monetary policy statement. The major averages have climbed firmly into positive territory, reaching multi-year intraday high.
The major averages have seen some further upside in recent trading, reaching new highs for the session. The Dow is up 156.49 points or 1.2 percent at 13,489.84, the Nasdaq is up 43.13 points or 1.4 percent at 3,157.44 and the S&P 500 is up 18.45 points or 1.3 percent at 1,455.01.
The strength that has emerged on Wall Street comes after the Federal Reserve announced a plan to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month.
The Fed also announced the continuation of its "Operation Twist" program, saying that the actions taken together will increase the central bank's holdings of longer-term securities by about $85 billion each month through the end of the year.
While the moves are designed to put downward pressure on longer-term interest rates, support mortgage markets, and help make broader financial conditions more accommodative, the Fed said it would continue its purchases of mortgage-backed securities until the outlook for the labor market improves substantially.
The Fed also left interest rates at near-zero levels and said exceptionally low rates are likely to be warranted at least through mid-2015.
Peter Boockvar, managing director at Miller Tabak, said, "Bottom line, Bernanke gave us what many should have expected after his Jackson Hole speech where he defended previous QE and gave his 'grave' concerns with the labor market comment."
The Fed will unveil its latest economic forecasts at 2 pm ET, and Fed Chairman Ben Bernanke will hold a press briefing beginning at about 2:15 pm ET.
Gold stocks have moved sharply higher on the news from the Fed, as the announcement contributed to a rally by the price of the precious metal. With gold for December delivery jumping $35.50 to $1,769.20 an ounce, the NYSE Arca Gold Bugs Index has surged up by 3.8 percent.
Considerable strength has also emerged among banking stocks, as reflected by the 2.2 percent gain being posted by the KBW Bank Index. With the gain, the index has reached its best intraday level in well over a year.
Steel, electronic storage, telecom, and chemical stocks also posting notable gains, moving higher along with most of the major sectors.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. While Japan's Nikkei 225 Index rose by 0.4 percent, Hong Kong's Hang Seng Index edged down by 0.1 percent.
The major European markets also ended the day mixed. The U.K.'s FTSE 100 Index rose by 0.7 percent, while the German DAX Index fell by 0.5 percent and the French CAC 40 Index tumbled by 1.2 percent.
In the bond market, treasuries have seen considerable volatility following the Fed announcement and are currently nearly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.77 percent.
by RTT Staff Writer
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