Stocks bounded higher Wednesday after the Federal Reserve said the economy appears to be “leveling out” rather than simply shrinking at a slower rate.
NEW YORK (AP) — A more upbeat Federal Reserve is reassuring investors that they’ve been making the right bets. Stocks bounded higher Wednesday after the central bank said the economy appears to be “leveling out” rather than simply shrinking at a slower rate. The Fed’s more positive take on the economy compared with its assessment in June wasn’t surprising but it still bolstered hopes that the economy in in fact rebounding.
Wednesdy’s advance restarted the market’s summer rally after a pause on Monday and Tuesday. Major market indexes jumped more than 1 percent, including the Dow Jones industrial average, which jumped 120 points.
Financial and technology shares posted some of the strongest gains after ratings upgrades and profit reports provided fresh evidence of a recovery.
Investors drew reassurance from policymakers’ comments. The Fed left interest rates unchanged, as expected, following a two-day policy meeting.
“They did really endorse the fact that we’re moving into recovery, not searching for the bottom,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.
Stocks have been rallying much of the past four weeks on expectations that the economy is strengthening.
The Fed also said it would slow the pace of its program to buy $300 billion worth of Treasury securities so that it will close at the end of October, rather than September as originally intended. The central bank has bought $253 billion of the securities so far. The program is designed to reduce rates on mortgages and other consumer debt.
“The fact that they are going to wind down the Treasury purchases I think leaves the clear impression that they are quite satisfied with the progress we are making in the recovery,” McCain said.
According to preliminary calculations, the Dow rose 120.16, or 1.3 percent, to 9,361.61. The Standard & Poor’s 500 index rose 11.46, or 1.2 percent, to 1,005.81, while the Nasdaq composite index gained 28.99, or 1.5 percent, to 1,998.72.
About three stocks rose for every one that fell on the New York Stock Exchange, where volume came to a light 1.2 billion shares, flat with Tuesday. Light volume can skew price moves.
The gains came a day after the market posted its biggest loss in five weeks. The Dow slid 1 percent and the S&P 500 index lost 1.3 percent.