New York – Wall Street had a bullish start to the new year Tuesday, with the Dow Jones industrials surging nearly 130 points after the Federal Reserve signaled a willingness to end its campaign of interest- rate hikes in the near future.
In minutes from the Fed’s Dec. 13 meeting, released Tuesday, policymakers disagreed on exactly when to stop the policy of raising rates in quarter-percentage-point increments, but the Federal Open Market Committee members did agree that an end was coming soon. The nation’s benchmark rate stands at 4.25 percent, the result of quarter-percentage-point hikes over the past 13 meetings.
Investors ended 2005 with the fear that the Fed would go too far in raising rates, choking off economic growth in its effort to stem inflation. That concern had kept stocks volatile for much of the year and stymied Wall Street’s typical year-end rally. But the news of a possible policy shift was greeted with enthusiastic buying Tuesday.
“Given the rise we saw, it shows you the importance of interest rates and what the Fed thinks,” said Jay Suskind, head trader at Ryan Beck & Co.
“This gives us hope that the Fed will be sensitive to the economy and we can get back to that nice ‘Goldilocks’ economy where growth is just right.”
The Dow rose 129.91, or 1.21 percent, to 10,847.41.
Broader stock indicators also advanced sharply. The Standard & Poor’s 500 index added 20.51, or 1.64 percent, to 1,268.80, and the Nasdaq composite index gained 38.42, or 1.74 percent, to 2,243.74.
The Bloomberg Colorado Index, a price- weighted list of companies based in the state, rose 6.42 to 332.46.
Bonds moved higher, with the yield on the 10-year Treasury note falling to 4.37 percent from 4.40 percent late Friday. The dollar was mixed against other major currencies, while gold prices rose sharply.
The Fed minutes helped stocks overcome a number of hurdles in early trading, including a sharp jump in energy prices. A barrel of light crude settled at $63.14, up $2.06, on the New York Mercantile Exchange.
