U.S. Stocks Rally as Federal Reserve Signals Low Interest Rates; GE Gains - Bloomberg

U.S. stocks rose, giving the Standard & Poor’s 500 Index the fifth gain in six days, as the Federal Reserve renewed its pledge to stimulate growth with low rates and said a pickup in inflation is likely temporary.

General Electric Co. (GE) added 2.7 percent after saying it wants to boost its dividend. Moody’s Corp. (MCO), whose founder John Moody created credit ratings more than a century ago, climbed 6.7 percent as profit beat estimates by 25 percent. Amazon.com Inc. (AMZN) gained 7.9 percent as the world’s largest online retailer reported sales that topped predictions and Deutsche Bank AG increased its share-price estimate to $215.

The S&P 500 added 0.6 percent to 1,355.66 at 4 p.m. in New York. The Dow Jones Industrial Average gained 95.59 points, or 0.8 percent, to 12,690.96. The Russell 2000 Index of small companies rose 0.6 percent to 858.31, a record. The Fed left its benchmark interest rate in a range of zero to 0.25 percent and retained a pledge in place since March 2009 to keep it “exceptionally low” for an “extended period.”

“It’s a sigh of relief,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc. in Raleigh, North Carolina, which manages $4 billion. “The Fed kept the language. At least for the rest of this year and into next year, we see accommodative policy. In addition, there’s a perception that the signs of inflation are fairly tamed at this juncture. That’s another positive. Before the announcement, we also got good corporate earnings releases. So, that combination is lifting the equity markets at this point.”
Economic Stimulus

The S&P 500 has rallied 29 percent since Fed Chairman Ben S. Bernanke suggested on Aug. 27 that he would pursue a second round of asset purchases to stimulate the economy, a tactic known as quantitative easing. Earnings per share beat estimates at 77 percent of the 197 companies in the S&P 500 that have reported quarterly results since April 11, according to data compiled by Bloomberg. more ...