Fed Announcement Spurs Record Day for Stocks (Bloomberg)
Both the S&P 500 and the Dow reached new record closing levels today, with 1.4% and 1.1% growth, respectively, after a stagnant Wednesday. The growth was largely fueled by Federal Reserve Chairman Ben Bernanke’s affirmation that monetary stimulus will continue. “Everybody’s hanging on the Fed’s every word,” Malcolm Polley, chief investment officer at Stewart Capital Advisers LLC in Indiana, Pennsylvania, said. “Even though Bernanke’s comments after the last FOMC meeting really weren’t hawkish, the market has wanted more clarity in terms of what he meant. Bernanke was as clear as one can be, saying ‘We’re not going to step on the brakes. We’re just going to let up on the accelerator.’ The more dovish comments he made yesterday clarifies that position.”
Rising oil prices and peak driving season are expected to cause gasoline prices to jump up to 10 to 20 cents per gallon in the next few days. The national average at the pump Wednesday was $3.50 per gallon, up two cents from Tuesday’s level, according to AAA’s Fuel Gauge. “Short-term, we’re going to see the average go into the $3.60, $3.70 range,” Tom Kloza, chief oil analyst with GasBuddy, said. “You’re looking at some markets that were closer to $3 a gallon, like the upper Great Lakes, and they’re going to go back up and be closer to $4. Probably every market in the country has gone up at least 30 cents in the wholesale market since June 28.”
The dollar collapsed broadly today as remarks from Federal Reserve Chairman Ben Bernanke made investors reassess the timing of when the U.S. Central Bank may decide to wind down its asset purchase program. “The dramatic drop in the dollar highlights how one sided (dollar bullish) the market had become and how quickly traders raced to close out long dollar positions,” said Camilla Sutton, chief foreign exchange strategist at Scotiabank in Toronto.