Wall Street swings to gain after Fed's bonds buying plan

08:15, November 04, 2010      

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Wall Street swung to gain on Wednesday after the U.S. Federal Reserve announced a plan to buy 600 billion U.S. dollars more in Treasury bonds.

The Fed announced Wednesday the "Quantitative Easing" (QE2)) monetary policy after a two-day meeting to boost the sluggish economic growth.

"The pace of recovery in output and employment continues to be slow," the Fed said in a statement after a policymaking panel meeting.

Federal Open Market Committee said that it will purchase a further 600 billion dollars of longer-term Treasury securities by the end of the second quarter of 2011.

The number was consistent with market anticipation, which was between 500 billion to 700 billion dollars. However, the QE2 policy is widely questioned. Many economists doubt about the policy's effectiveness and worry about its spillover effect on the rest of the world.

The Fed also decided to maintain the target range for the federal funds rate at historical low level of zero to 0.25 percent to stimulate the economic recovery.

The Dow Jones industrial average rose 26.41 points, or 0.24 percent, to 11,215.13. The Standard &Poor's 500 index was up 4.39 points, or 0.37 percent, to 1,197.96 and the Nasdaq gained 6.75 points, or 0.27 percent, to 2,540.27.

The greenback fell after the Fed's plan, while commodity prices rose. Light, sweet crude for December delivery rose 79 cents to close at 84.62 dollars a barrel on the New York Mercantile Exchange.

In its weekly report, the Energy Department said crude inventories increased by 2 million barrels to 368.2 million barrels last week.

In London, Brent crude rose 97 cents to close at 86.38 dollars a barrel on the ICE Futures exchange.

Source: Xinhua


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