WALL STREET 15 Sept 2012 >>> U.S. stocks extend Fed-inspired rally

DJIA ends at multi-year high on Feds stimulus promise
U.S. stocks rose for a fourth straight session on Friday to close out the week at nearly five-year highs after the Federal Reserve took bold action to spur the economy, a move that could keep equities buoyed in the coming months. Equities are in a run-up that also pushed the S&P 500 to end higher for four consecutive months. The extended advance has come mainly from actions by Europe's and the United States' central banks to keep interest rates low and stimulate their struggling economies.

The Fed said Thursday that it would keep up its aggressive bond-buying until unemployment falls. Chairman Ben Bernanke said he wanted to see a convincing improvement in the economy that could deliver sustainable job creation.

Scaling back from a 113-point climb, the Dow Jones Industrial Average DJIA +0.40%  gained 53.51 points, or 0.4%, to 13,593.37, the highest close since Dec. 10, 2007. It gained 2.2% on the week, tallying gains for eight of the past 10 weeks. The sharp turn higher for equities came after the Fed unveiled an open-ended plan to buy mortgage-backed assets at a clip of $40 billion a month. The central bank also pledged to take more actions, if necessary, to give the stodgy economy and labor market a fresh jolt of power.

It was the best week for the Dow since early June. The broader markets had a strong week as well: the S&P 500 jumped 1.9% and the Nasdaq rallied 1.5%. 

ANALYSTS QUOTES

"Today is simply a continuation of the strength we saw yesterday." 

"Bernanke's comments are going to create an artificial floor on the market, meaning that we could see higher prices over time. Any correction that we get will be no more than a few percentage points."

"Right now we have this short-term euphoria. But then the question is where do we go from here? I think after a week or so, if the underlying economic data doesn't change, you're going to see the market drop a bit and we'll continue to plod along until the election."

“We had a fair amount of data out right on the heels of the Fed, but probably the biggest influence today is still the after-effects of the Fed’s announcement yesterday.”

"We are starting to get into that heady territory where you need to be on the defensive. Trying to squeak out the last 5 percent of a move when there is potentially a 15 to 20 percent downside in my opinion is pretty dangerous stuff."

"While everyone is trying to figure out what QE3 means to the economy, stocks have spoken, and they like it. At the same time, hedge funds have totally dropped the ball and missed most of this rally. There's a good chance these Johnny-come-latelies could be the fuel for the next surge higher."

 

 HAPPY TRADING