Stock Market and Banking & Finance and Investing

Stocks open higher day after Federal Reserve move

September 14, 2012

Stocks opened higher Friday, on track to record one of their best weeks since June, after the Federal Reserve stepped in again to help the disappointing economic recovery.

Just before 11 a.m., the Dow Jones industrial average was up 66 points at 13,606. The Dow rocketed higher by 206 points on Thursday after the Fed announcement and closed at a four-year high.

The Fed pledged to spend $40 billion on mortgage bonds to drive down long-term interest rates and push investors into stocks. It also extended its guarantee of super-low interest rates by six months, into 2015.

The Dow has climbed 2.3 percent this week, its best performance since early June. The last two weeks for the Standard & Poor's 500 index have also been the best since June.

A summer rally has put the Dow within 600 points of its all-time high — 14,164, set on Oct. 9, 2007.

European and Asian stocks spiked Friday in their first trading after the Fed move. French stocks were up 2 percent and German stocks 1 percent. The Nikkei average in Japan climbed almost 2 percent.

In the United States, the S&P was up 12 points at 1,472, and the NASDAQ composite index was up 35 at 3,191.

UnitedHealth Group rose 59 cents, or 1.1 percent, to $54.48 after an announcement that it will be added to the Dow, replacing Kraft Foods. It is the first change in the makeup of the 30-stock average since June 2009.

In the broader market, energy stocks were the best performers and telecommunications companies the worst.

The price of oil rose above $100 for the first time since May before dipping back below. It was up $1.35 for the day at $99.65. Unrest in the Middle East this week has heightened concerns about world oil supply.

Alpha Natural Resources was the best performer in the S&P 500. It rose 63 cents, or 7.7 percent, to $8.86. Valero Energy, Chesapeake and Chevron were among the other winners among energy stocks.

Gold pushed higher for a second day, rising $3 an ounce to $1,775. Gold tends to rise after the Fed announcements like Thursday's, partly because investors fear inflation and partly because a weaker dollar makes gold more expensive.

As investors moved into stocks, they pulled money out of bonds, driving yields up. The yield on the benchmark 10-year U.S. Treasury note climbed 0.16 percentage pont to 1.88 percent, its highest since early May.

The dollar lost ground for a second day against world currencies. The euro climbed a penny and a half to $1.315.

The Commerce Department reported that retail sales increased in August by a seasonally adjusted 0.9 percent, mostly because of higher gasoline prices. Outside of gas and cars, sales rose only 0.1 percent, weaker than in July.

And the cost of fuel drove up consumer prices in August by the most in three years, according to the Labor Department. Without higher energy costs, inflation was static.

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