YAHOO [BRIEFING.COM]: The
FOMC's plan for further quantitative easing caused stocks to swing dramatically
this afternoon, but the broader market ultimately made a modest gain as the
dollar dropped to a loss.
Action this morning was
listless as participants were largely unwilling to take on positions ahead of
the latest FOMC policy statement. The Fed's analysis of economic conditions was
hardly changed and, as expected, it kept the target rate for the federal funds
rate at 0.00% to 0.25%.
The Fed delivered to those
that wanted further quantitative easing measures. It intends to purchase a
further $600 billion of longer-term Treasury securities by the end of the
second quarter of 2011. Those purchases will be completed at a pace of about
$75 billion per month, or about $110 billion per month when taking into account
the principal payments that are being reinvested from agency debt and agency
mortgage-backed securities. That makes for total asset purchases of about $850
billion to $900 billion through June.
That notion caused the dollar
to drop. Though it attempted to pare its loss, it still finished the day down
0.4%.
The greenback's pullback
helped the major equity averages settle in higher ground with modest gains. The
S&P 500 even fractionally extended its five-month high, but could not quite
make it to 1200. Stocks actually had been caught up in whipsaw trade following
the FOMC's statement, though the bottom line of the Fed's extra accommodative
stance is supportive of stock prices.
The CRB Commodity Index
climbed to a fresh two-year high earlier today, but it finished flat after it
failed to sustain that move.
Oil was a primary source of
support for the CRB. The energy component advanced 0.9% to settle pit trade at
$84.69 per barrel, even though the latest weekly inventory report showed a
bigger-than-expected build.
Natural gas prices were under
pressure for the entire session. The commodity closed pit trade at $3.83 per
MMBtu, down 1.0%.
Precious metals were down
modestly in the early going, but dove sharply as trade progressed. Gold shed
1.4% to finish at $1337.60 per ounce and silver settled 1.6% lower at $24.44
per ounce.