Fresh recovery hope lifts U.S. stocks

08:32, January 28, 2010      

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U.S. stocks rallied to close after moving in and out positive area most of the session on Wednesday as investors were encouraged by Fed's latest assessment on economy.

All major indexes locked gains. The Dow Jones rose 41.87, or 0. 41 percent, to 10,236.16. Broader indexes also traded higher. The Standard & Poor's 500 index gained 5.33, or 0.49 percent, to 1,097. 50 and the Nasdaq added 17.68, or 0.80 percent, to 2,221.41.

Financials got a lift after the Fed decided to keep the key interest rates unchanged, which is in line with market's anticipation. Policy makers said they'd like to keep interest rates at record low levels near zero for a while to nurture an economic recovery held back by stubbornly high unemployment.

Wells Fargo & Company gained 1.21 U.S. dollars, or 4.48 percent, to 28.20 dollars a share. Bank of America Corporation shares rose 42 cents, or 2.84 percent, to 15.19 dollars.

Market sentiment was further lifted when investors digested Fed 's latest assessment on economy. "Information received since the Federal Open Market Committee met in December suggests that economic activity has continued to strengthen and that the deterioration in the labor market is abating," the Fed said in a statement released at the closing of its two-day policy meeting.

In the December statement, the Fed had said economic activity " has continued to pick up."

Meanwhile, Ben Bernake was elected as the chairman of the central bank's Federal Open Market Committee, which signals more assurance of his reappointment as the head of the Fed. Emerging uncertainty about Bernanke's second term as the Fed's chairman had caused uneasiness in the market, as investors were concerned about the stability and continuity of monetary policy. U.S. Senate will vote on Thursday to decide Bernanke's fate, whose term expires on Sunday.

Fed's brighter tone helped stocks pared early losses after a negative housing data. According to the U.S. Commerce Department, new home sales fell to a seasonally adjusted annual rate of 342, 000 in December, the lowest in nine months, after falling 9.3 percent in November to 370,000.

Technology sector was boosted on Wednesday after Apple introduced its latest tablet iPad, which was billed by CEO Steve Jobs as "so much more intimate than a laptop and so much more capable than a smart phone."

Apple shares gained more than two dollars, or nearly one percent, after the iPad debut. AT&T Inc., which partners with Apple in providing 3G service, also rose more than one percent.

In company news, Berkshire Hathaway Inc., which is run by billionaire investor Warren Buffett, surged 5.16 percent after it is reported that its class B shares will replace Burlington Northern on S&P 500 indicator.

Investors are waiting for President Obama to deliver his first annual State of the Union address on Wednesday evening. And the market is eager to know more details that how the government is going to regulate financial industry, capping rocketing deficits and creating jobs.

Source: Xinhua
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