By Kate Gibson
U.S. stocks finished ahead on Wednesday, propelling the Dow
Jones Industrial Average to its longest winning streak since August
2009, as Wall Street rejoiced over the Federal Reserve's
prior-session decision to hold rates steady, which should keep
banks' borrowing costs at record lows for much of the year.
"There's no question the Fed being easy continues to feed this.
Easy money is creating massive misallocations everywhere, and that
party can continue. As long as you have Ben the bartender manning
the tap, anything is possible," said Peter Boockvar, equity
strategist at Miller Tabak.
On Tuesday, the Federal Reserve's interest-rate committee
released a statement saying it expected to keep rates exceptionally
low "for an extended period" as the economy continues to
recover.
The Dow industrials (DJI) added 47.69 points, or 0.5%, to
10,733.67, with 24 of its 30 components gaining.
Closing at its highest level since Sept. 30, 2008, the S&P
500 Index (SPX) rose for a third straight day, adding 6.75 points,
or 0.6%, to 1,166.21. Energy and financial shares paced sector
gains among the index's 10 industry groups.
Lincoln National Corp. (LNC) led financial gains after its
upgrade by Bank of America Merrill Lynch. .
Advancers beat decliners by a more than a 2-1 ratio on the New
York Stock Exchange, where nearly 5.1 billion shares exchanged
hands.
Year-to-date, daily volume in 2010 has averaged about 4.7
billion, still below last year's daily average of just under 5.5
billion. In 2008, the daily average came to 4.9 billion, according
to Boockvar. The tally includes electronic and floor trades.
"A lot of the short-term traders aren't participating because we
don't have the volatility," said Jeffrey Friedman, senior market
strategist at Lind-Waldock, who noted the CBOE Market Volatility
Index (VIX) is trading under 20, a scenario now in play for a third
week.
Hartford Financial Services Group (HIG) was among those
advancing after its late-Tuesday announcement that it would repay
$3.4 billion in government relief funds. .
The Nasdaq Composite Index (RIXF) climbed 11.08 points, or 0.5%,
to 2,389.09.
On Capitol Hill, Federal Reserve Chairman Ben Bernanke testified
Wednesday about efforts to reform banking regulation, telling
Congress the Fed's participation in the oversight of banks improves
its ability to carry out its monetary goals.
The push for reform stems in part from what began as trouble in
the housing market, with the ripple effect from that crisis still
in play. .
Crude-oil futures closed at $82.93 a barrel and gold futures
also gained, finishing at $1,124.2 an ounce.
Underpinning commodities' gains, the dollar fell against the
Japanese yen and rose against the euro. .
An early report on prices at the wholesale level offered more
credence to thinking that the Federal Reserve should not have to
hike rates anytime soon to curb inflation.
The Labor Department's producer price index declined 0.6% in
February, its largest drop in seven months. Taking out food and
energy costs, the index gained 0.1%. .
On Tuesday, stocks rose after the Fed's announcement that it
would keep its key rate for overnight loans between banks at
between zero and 0.25%. .
"Each FOMC meeting that keeps this language intact gives
investors 12 weeks of stability," said Marc Pado, U.S. market
strategist at Cantor Fitzgerald.
Shares of Blockbuster Inc. (BBI) fell 29% after the video-rent
chain said it might have to file for bankruptcy protection as it
struggles with debt after reporting a fourth-quarter loss of nearly
$435 million. .