Markets Rally as Fed Extends Stimulus

Investors had expected the central bank to start paring down the bond-buying program

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Ted S. Warren / AP

Federal Reserve Chairman Ben Bernanke walks outside of the Jackson Hole Economic Symposium, Aug. 31, 2012, at Grand Teton National Park near Jackson Hole, Wyo.

Stocks leapt to records highs Wednesday on news that the Federal Reserve would continue pumping life into the American economy through its bond-buying program.

The Dow Jones Industrial Average set a new high-water mark as a result of the news. Standard & Poor’s 500 Index, which has rallied more than 150 percent from its March 2009 low, rose to a record-busting 1,727.36, Bloomberg reports. According Reuters, Wall Street stocks have rocketed more than 20 percent this year driven largely by the Fed’s $85 billion bond-buying program.

Though progress has been made in recent years, certain factors, namely the uptick in mortgage rates leading to a drop in spending, point to the potential for slowed growth in the coming months. Federal Reserve Chairman Ben Bernanke pledged to keep interest rates near zero until we see “substantial improvement in the labor market,” with unemployment below 6.5 percent.

[Bloomberg]

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