|Wall Street rallies to all-time highs
The US stock market had a swift and clear reaction to the Federal Reserve's decision to trim stimulus: This was not so bad after all.
Stocks surged Wednesday, lifting the Dow Jones industrial average nearly 300 points, after the Fed decided it was time to start modestly scaling back its program.
“Investors should see this as a vote of confidence for the economy,'' said Kristina Hooper, head of US investment strategies for Allianz Global Investors, AP reports.
The Dow jumped 292 points, or nearly 2 percent, to 16,167.97 _ another all-time high for the blue-chip index. Shortly before the Fed announcement at 2 pm local time (2am HK time)., the Dow was up just 47 points.
The broader Standard & Poor's 500 index rose 29 points, also 2 percent, to 1,810.65 and the Nasdaq composite rose 46 points, or 1 percent, to 4,070.06.
The rally adds to what has already been a historic run for stocks. The S&P 500 is up nearly 27 percent, its best yearly performance since the dot-com boom of the late 1990s.
Stocks are expected to continue their rise in 2014, with market strategists predicting gains of 6 percent to 8 percent from current levels.
The stimulus program has given the Fed a big role in the current bull market. The S&P 500 index has surged about 26 percent since the Fed announced a year ago that it would buy the US$85 billion in bonds each month. And since the central bank's first round of bond buying at the end of 2008, stocks have soared about 124 percent.
Wednesday's pullback was a surprise to the market, as most strategists and economists expected the Fed to wait until March before pulling back. But investors say it is a welcome surprise.