Thursday, 19 September 2013

US stocks at record highs after Fed pulls back from pulling back

US stocks hit record highs on Wednesday after the Federal Reserve surprised investors by refraining from tapering its bond purchases. The Dow Jones Industrial Average rose 0.95 percent to 15,676.94 and the S&P 500 rose 1.22 percent to 1,725.52.

“Conditions in the job market today are still far from what all of us would like to see,” Chairman Ben Bernanke said at a press conference after the Fed's monetary policy meeting on Wednesday. “The committee has concern that rapid tightening of financial conditions in recent months would have the effect of slowing growth.”

The latest Fed forecasts released on Wednesday showed that the US economy is now expected to grow between 2 percent and 2.3 percent this year, down from a June forecast of 2.3 percent to 2.6 percent.

Underlining the Fed's cautious stance, US housing data on Wednesday were mixed. Housing starts rose 0.9 percent in August but was weaker than expected. Indeed building permits fell 3.8 percent.

In contrast, China's housing market looks in need of further cooling. Average new home prices in China's 70 major cities rose 8.3 percent in August from a year earlier, the fastest rate in at least 2½ years, according to Reuters.

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