NEW YORK – Wall Street advanced sharply Tuesday as investors interpreted minutes from the Federal Reserve’s last meeting as indicating the central bank is ready to keep cutting interest rates to boost the economy. The Dow Jones industrial average and Standard & Poor’s 500 index reached record highs.
The minutes from the Federal Open Market Committee’s Sept. 18 meeting, when Fed governors voted unanimously for a half-point cut, also showed that officials were concerned that weakness in the dollar could lead to higher inflation. But the Fed – signaling it is more willing to intervene – also said the economic outlook was uncertain because of the summer’s credit crisis and that there were still risks to growth that justified lower rates.
The major indexes were little changed just before the minutes came out, then rose sharply. Investors were hoping that the Fed would lean toward future rate cuts; central bankers will meet again Oct. 30-31.
Further, Federal Reserve Bank of St. Louis president William Poole said during a speech Tuesday he believes the financial markets are “still fragile” from weakening credit conditions but that they appear to be stabilizing.
The Dow rose 120.80, or 0.86 percent, to 14,164.53, eclipsing the previous record close of 14,087.55 reached Oct. 1. The Dow had a new trading high as well, rising to 14,166.97.
The S&P 500 rose 12.57, or 0.81 percent, to a record close of 1,565.15.
