U.S. stocks rally after Fed pledges to keep rates low

08:14, March 17, 2010      

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U.S. stocks rallied on Tuesday, with the Standard & Poor's hitting a new 17-month closing high, after the Federal Reserve pledged to keep rates low as well as offered a more upbeat assessment on economy.

The Dow Jones industrial average rose 43.83, or 0.41 percent, to 10,685.98. The Standard & Poor's 500 index rallied 8.95, or 0. 78 percent, to 1159.46, the highest since October 2008. The tech- heavy Nasdaq gained 15.80, or 0.67 percent, to 2,378.01.

The Federal Open Market Committee meeting concluded on Tuesday afternoon and the Fed said it will keep key interest rates at low levels for "an extended period" to safeguard the economic recovery, much as market had expected.

Moreover, Fed gave a slightly more positive assessment of the job market, saying it is stabilizing, better than the January statement. And Fed said businesses are spending "significantly" more on equipment and software.

Also lifting market sentiment, leading rating agency Standard & Poor's affirmed Greece's current rating and removed Greece from CreditWatch on Tuesday, saying Greece was on track to meet its near-term budget goals.

S&P's rating affirmation came after Europe's finance ministers' agreement on an emergency plan to rescue Greece. The ministers said they were ready to provide financial aid if the Greek government asked for it, but no details of the assistance were released.

In the economic data, U.S. housing starts fell slightly less than expected. According to the Commerce Department, construction of new homes and apartments fell 5.9 percent in February to a seasonally adjusted annual rate of 575,000 units, slightly higher than the 570,000 that economists were expecting.

Separately, the Labor Department said U.S. import prices in February tallied their first monthly drop since July 2009, a sign there is little inflation pressure coming from abroad.

Source: Xinhua
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