Stocks Record Biggest Gains In Two Months
AFTER DIGESTING THE Federal Reserve's interest-rate increase and parsing its mostly positive comments on the economy, investors exhaled and pushed stocks to their biggest gains in two months.</br></br>As widely expected, the Fed raised the target federal-funds interest rate, which banks charge each other for overnight loans, one-quarter point to 1.5%. Rattled by softness in recent economic growth, however, traders zeroed in on central-bank comments about the economy.</br></br>Their worry: That recent weakness in job growth and consumer spending would make the Fed question if the economy's recovery was losing steam and ratchet down the pace and scope of promised rate increases at future meetings.</br></br>In its statement the Fed acknowledged recent economic softness, but blamed high energy prices and said the economy "appears poised to resume a stronger pace of expansion going forward." This gave investors little indication that the Fed would deviate from its plan to raise rates at a "measured" pace in coming months.</br></br>Skeptics cautioned that by noting recent weakness, the Fed may have left itself room to hold off on more rate cuts if the economy sputtered. But most investors focused on the positive and read this as a vote of confidence for the economy and more rate increases.