Stocks, Bonds Advance as Fed Keeps Its Word
NOW INVESTORS can stop worrying about the Federal Reserve -- and start worrying about corporate earnings.</br></br>Fed policy makers yesterday did exactly what the market expected them to do: They raised their target short-term interest rate by a quarter point, the first increase in four years, and repeated their intention to be "measured" with future increases.</br></br>Stocks reacted with mild gains, and the bond market, which is driven more heavily than stocks by Fed interest-rate policy, celebrated with a sharp uptick.</br></br>"The Federal Reserve has a new policy of transparency and has kept its word," wrote Wells Fargo economist Sung Won Sohn in a report to clients.</br></br>The Dow Jones Industrial Average rose 22.05 points, or 0.21%, to 10435.48 -- leaving it virtually unchanged both for the quarter and for the full year. Investors now are wondering whether second-quarter profit reports, which will be streaming out this month, will feature the overall gains of more than 20% that analysts are forecasting.