New York – Stocks extended their rally Tuesday after the Federal Reserve’s latest take on the economy raised hopes that the central bank’s string of interest-rate hikes is coming to an end.
Minutes from the Fed’s Open Market Committee meeting Nov. 1 showed that policymakers remained worried that high energy prices would spark widespread inflation – all but guaranteeing more rate hikes. Yet the Fed also said it would remain sensitive to economic data and conscious of what those rate hikes would do to a slowing economy, which investors treated as a possible signal that the Fed could end rate hikes over the next few months.
The release of the minutes turned the market around, lifting the major indexes out of losses and giving new life to Wall Street’s November rally.
“This is really what we needed to keep this rally going,” said Scott Wren, equity strategist for A.G. Edwards & Sons. “The Fed seems to be recognizing that there may come a time to stop raising rates, and that’s very good for stocks.”
The Dow Jones industrial average rose 51.15, or 0.47 percent, to 10,871.43.
Broader stock indicators also moved higher. The Standard & Poor’s 500 index added 6.38, or 0.51 percent, to 1,261.23, and the Nasdaq composite index gained 11.89, or 0.53 percent, to 2,253.56.
The Bloomberg Colorado Index, a price-weighted list of companies based in the state, rose 2.04 to 320.82.
Bonds moved higher after the Fed minutes were released, with the yield on the 10-year Treasury note slipping to 4.43 percent from 4.47 percent late Monday.
The dollar was mixed against other major currencies, while gold prices moved higher.
Crude oil rose for a second straight day in anticipation of a cold Thanksgiving weekend in the Northeast. A barrel of light crude settled at $58.84, up $1.14, on the New York Mercantile Exchange.
If oil continues to rise through the winter heating season, that could combine with interest rates to slow down the economy faster than expected and prevent stocks from continuing their rise through 2006.
