YAHOO[BRIEFING.COM]: The
latest policy statement from the Federal Open Market Committee (FOMC) enticed
buyers to enter the bidding process and push stocks markedly higher. Buyers
rallied around financial stocks, which yet again helped provide leadership to
the broader market.
The FOMC is maintaining a
target fed funds lending rate within the range 0.00% to 0.25%, as predicted.
Exceptionally low levels are expected for an extended period.
The Fed will bolster its
balance sheet by buying up to $300 billion of Treasuries during the next six
months. The 10-year Note surged on the news; it finished almost 4
points higher, pushing its yield down to a two-month low of 2.55%.
Asset purchases didn't end
there, though. The Fed will purchase an additional $750 billion of agency
mortgage-backed securities this year, bringing the total to $1.25 trillion.
An additional $100 billion of
agency debt will also be purchased this year, bringing the total to $200
billion.
News the Fed will be expanding
its balance sheet weighed on the Dollar Index, which lost 2.7% as it fell to
its lowest level since late January.
Still, the Fed's decision to
purchase so many of these assets is aimed at helping stimulate the flow of
credit and creating demand for the assets.
That recognition provided a
lift to financial stocks. Financials had already overcome an early fit of
weakness, but managed to climb even higher to close at session highs with a
gain of 10.1%.
The strength of a broad range
of diversified financial services companies (+13.2%) and diversified banks
(+14.9%) helped the S&P 500 outperform its counterparts. The broader
market had been stuck in negative territory and traded in a relatively narrow
range until the FOMC's announcement convinced traders to follow the lead of the
financial sector.
The stock market closed with
broad-based gains even after sellers resurfaced during the last couple of hours
of trading to knock the stock market off its session highs.
Outside of the financial
sector, Sun Microsystems (JAVA 8.89, +3.92) and Adobe
(ADBE 21.35, +2.22) traded with considerable strength. Sun was boosted by news
from The Wall Street Journal that IBM (IBM 91.97,
-0.94) is in talks to acquire the company for at least $6.5 billion in cash. As
of Tuesday's close, Sun Microsystems had a market capitalization of just $3.7
billion. Meanwhile, Adobe is garnering interest after posting
better-than-expected earnings for its latest quarter.
Oracle (ORCL 15.83, +0.43) also showed strength.
The company announces its latest quarterly results after the closing bell.
Trading volume was heavy as
more than 2.0 billion shares traded hands on the NYSE.
There were some
higher-than-expected inflationary readings posted this morning. Still, they are
unlikely to fuel inflation concerns. Instead, the reports should help ease
deflation concerns. The Consumer Price Index for February showed a 0.4%
month-over-month increase, which topped the 0.3% increase that was expected.
Core CPI for February increased 0.2% month-over-month, which also exceeded the
consensus 0.1% increase. DJ30 +90.88 NASDAQ +29.11 NQ100 +1.2% R2K +3.5% SP400
+3.1% SP500 +16.27 NASDAQ Adv/Vol/Dec 1926/2.15 bln/756 NYSE Adv/Vol/Dec
2492/2.07 bln/592