US stocks surge after Fed announces more help

By: Associated Press Email
By: Associated Press Email

NEW YORK (AP) -- Stocks are soaring on Wall Street.

The Federal Reserve announced a package of aggressive measures to help the economy. And it was just what investors wanted to hear.

The Dow Jones industrial average is up 230 points at 13,563. That's a four-year high. The Standard & Poor's 500 index and Nasdaq composite index are each posting gains of more than 1.5 percent.

The Fed says it will keep interest rates super-low into 2015. It also announced an open-ended package of bond purchases.

Chairman Ben Bernanke says the Fed does not have a specific economic target for its new stimulus program and will keep buying bonds until it sees more jobs, lower unemployment and stronger growth.

"We are looking for on-going sustained improvement in the labor market," Bernanke said during a news conference Thursday after the Fed announced a series of bold stimulus to get the economy moving. "There's not a specific number in mind. But what we've seen in the last six months isn't it."

The Fed said Thursday that it will spend $40 billion a month to buy mortgage bonds for as long as it deems necessary. It plans to keep short-term interest rates at record lows through mid-2015. And it's ready to try other measures if hiring doesn't improve.

However, some economists think there will be only a slight benefit to the economy.

The actions, announced after a two-day meeting, point to how sluggish the economy remains, more than three years after the end of the recession.

"We doubt it will be enough to get the economy on the right track," said Paul Ashworth of Capital Economics.

He said "it's only a matter of time" before people start guessing when the Fed will boost the purchases above the $40 billion a month.

Critics also warn that more bond purchases raise the risk of higher inflation later.

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