US Stocks Soar Higher as Fed Plans Treasury Purchases

The benchmark index of US have gone up to the highest closing levels since last October, mainly attributed by the expansion decision of Federal Reserve of its asset-purchase program. 8 out of the 10 groups that fall under the Standard & Poor’s 500 Index rallied. On a whole, S&P rose by 0.3% and is at 1431.81 currently. Today’s gain has allowed the S&P Index to erase all of its losses that it experienced after President Obama’s reelection on 6th November. The Dow Jones Industrial Average also surged by 19.36 points and is at 13267.80 now. Over the last 6 days, the gauge has increased by a total of 2.4%. This marks the longest advance of the gauge since last August. The total trading volume in the S&P 500 companies was 13% higher in comparison with the 30-day average of this time.

If the prediction of chief US equity strategist of JPMorgan Chase, Thomas Lee turns out to be correct, the S&P index is going to reach 1580 by end of 2013. US stocks are expected to get a big boost as the year end draws closer, all thanks to the so called Santa Claus rally.

US Federal Reserve has decided to buy treasury securities worth $45 billion and the process will start from January of next year. Another program of monthly mortgage-debt purchases worth $40 million will also continue, in the meantime. The asset buying program is going to run until the data from the US labor market improves significantly, as confirmed by the Federal Open Market Committee. The main interest rate is not expected to increase within the next couple of years, as stated by the committee.

Douglas Cote, who works as the Chief Market Strategist for ING US Investment Management, stated that the Fed is going to put a lot of cash in the system through implementing these programs.

Coming to individual stock prices, Berkshire shares advanced by 2.4% and is at $89.35. DuPont, the biggest chemical maker in US, also surged by 1.9%. The 3rd biggest health insurer in US, Aetna advanced by 3.8% as well. The 2nd largest equity exchange in US, NASDAQ OMX Group also experienced a jump of 3.9% and is at $24.35 currently. The renowned US based audio-technology company, Dolby Laboratories also added 2.8% and each share is currently priced at $35.14.