Fed Statement Powers Stock Advance on Wall Street

Nichole Harper
21 May, 2014
New York City

U.S. market indexes traded higher after Fed policy makers debated options and impacts of higher interest rates regime. The policy makers at the central bank see no inflation risk in the near term despite the pickup in economic activities.

[R]3:05 PM New York – U.S. market indexes traded higher after Fed policy makers debated options and impacts of higher interest rates regime. The policy makers at the central bank see no inflation risk in the near term despite the pickup in economic activities.[/R]

U.S. stocks turned higher as earnings season wound down and small cap companies built upon morning gains.

S&P 500 index increase 12.18 or 0.65% to 1,885.01 and the Nasdaq Composite Index gained 26.04 or 0.6% to 4,121.71.

Fed in a statement said it is on the course to complete its bond purchase program this year and policy makers debated options and implications of higher interest rates on the economy.

Fed policy makers estimated inflation is expected to remain below 2% target and hinted that the “expansion of aggregate demand would result in further progress” in employment and inflation objectives.

Since the financial crisis the Fed has purchased more than $3 trillion in government bonds and the central bank has targeted to end the bond purchase by the end of the year.

Fed is looking at various unconventional tools and including increasing interest rates bank pay to the Fed for parking money.

European Markets

Market indexes in London, Paris and Frankfurt gained following a broad market advance across the euro zone.

FTSE 100 index in London closed up 0.3%, CAC 40 index in Paris added 0.4% and in IBEX 35 in Madrid added 0.7%.

DAX 30 index in Frankfurt added 0.6% to close at 9,697.87.

Asian Markets

Market indexes in Tokyo closed lower and the Bank of Japan completed its 2-day meeting with no new announcement.

The statement issued by the central bank offered an upbeat assessment of the economy and forecasted “to continue a moderate recovery as a trend.”

The central bank kept its ultra-accommodative policy in place and dashed hopes of additional stimulus measures.

April trade deficit in Japan narrowed after the yen gained and imports eased on higher sales tax on consumer goods.

The Sensex Index fell 78.86 or 0.3% to close at 24,298.02 The CNX Nifty slid 22.60 to 7,252.90.

Australian market indexes traded lower after iron prices dropped to the low of the year and reached at the level last seen in 2012.

Australian dollar slipped to 92.34 U.S. cents and stock market trading turnover gained to 745 million shares worth $4.44 billion.

The ASX 200 index edged up 4.20 to 5,424.60 and the broader All Ordinaries rose 2.20 to 5,403.90.

Iron ore price declined to $97 a ton, landed in China, the lowest since 2012. The price in the spot market has been declining for three months in a row.