Stocks Stage Big Rally on Fed's Statement
A relief rally carried Wall Street sharply higher Thursday after the Federal Reserve appeared to soften its stance on future interest rate hikes, saying it would consider both the economy's health and inflation as it formulates its policy. The Dow Jones industrial average had its biggest one-day point gain in more than three years.</br></br>The Dow surged 217.24, or 2 percent, to 11,190.80, its biggest single-day jump since March 21, 2003. The Standard & Poor's 500- stock index climbed 26.87, or 2.2 percent, to 1272.87, its largest gain since March 17, 2003; the Nasdaq composite index jumped 62.54, or 3 percent, to 2174.38, its biggest jump since July 27, 2002.</br></br>While investors had been expecting the quarter-point increase in short-term lending rates, they were reassured by the central bank's accompanying statement, in which it noted economic growth had moderated but that "some inflation risks remain." The Fed has tended to focus on inflation in past statements, but this time said it would look at the economy's growth rate along with the impact of inflation in deciding whether to raise rates in the future.</br></br>Bonds rose further on the Fed's statement, with the yield on the 10-year Treasury note tapering to 5.20 percent from 5.25 percent late Wednesday. The 2-year yield dropped to 5.20 percent, a signal of heightened confidence in holding long-term debt.</br></br>The Fed's announcement enabled Wall Street to look past a steep jump in oil prices after a report showed shrinking U.S. gasoline reserves with the start of the busy summer driving season.