The Clinton Herald, Clinton, Iowa

Business & Technology

September 19, 2013

Stock market sets record after Fed keeps stimulus

(Continued)

Some investors advised caution, even as the stock market hit all-time highs.

While the Fed’s decision is positive for the market in the short term, “investors need to take a step back and consider the idea that maybe the U.S economy is on weaker footing than we originally thought,” said Marc Doss, regional chief investment officer for Wells Fargo Private Bank.

Bond prices also rose sharply, sending yields lower. The yield on the 10-year Treasury note fell to 2.68 percent from 2.87 percent a minute before the Fed released its statement. It was a rush into bonds not seen since October 2011. The yield on the 10-year Treasury note is a benchmark for many kinds of lending rates, including home mortgages.

As bond yields plunged, investors snapped up stocks that tend to pay richer dividends, such as utilities. The Dow Jones utility average jumped 3 percent, its best day in two years.

Stocks of home builders also rose as investors speculated that the Fed’s pledge to keep interest rates low would continue to benefit the housing market. Pulte Homes, Hovnanian and Toll Brothers were up more than 5 percent each, while D.R. Horton jumped nearly 7 percent.

The price of gold jumped $55, or 4 percent, to $1,364 an ounce.

In June, Fed Chairman Ben Bernanke laid out a possible timetable for easing up on the bond purchases, and pledged to end them by the middle of 2014, if the economy continued to improve.

The Fed’s next meeting is October 29-30, another opportunity for the central bank to start reducing the program.

Wells Fargo’s Doss and other investors said the Fed might be waiting to see what happens in Washington, D.C. in the coming weeks. A debate over the debt ceiling and a showdown between Congressional Republicans and the White House over the budget looms.

Bernanke probably kept the stimulus in place because he wanted to be certain the economy was ready to function without the Fed’s help, said Matt Tom, head of public fixed income at ING U.S. Investment Management.

Cutting back before the economy was ready would have been much more destabilizing to the market, he said.

Text Only
Business & Technology
  • Wal-Mart to cut prices more aggressively in back-to-school push

    Wal-Mart Stores plans to cut prices more aggressively during this year's back-to-school season and will add inventory to its online store as the chain battles retailers for student spending.

    July 21, 2014

  • Hospitals let patients schedule ER visits

    Three times within a week, 34-year-old Michael Granillo went to the emergency room at Northridge Hospital Medical Center in Los Angeles because of intense back pain. Each time, Granillo, who didn't have insurance, stayed for less than an hour before leaving without being seen by a doctor.

    July 21, 2014

  • McDonald's, KFC in China face scandal BEIJING — McDonald’s and KFC in China faced a new food safety scare today after a Shanghai television station reported a supplier sold them expired beef and chicken.The companies said they immediately stopped using meat from the supplier, Husi Food C

    July 21, 2014

  • Your chocolate addiction is only going to get more expensive

    For nearly two years, cocoa prices have been on the rise. Finally, that's affecting the price you pay for a bar of chocolate - and there's reason to believe it's only the beginning.

    July 18, 2014

  • Facebook tests button to let people shop from its website

    Members on desktop computers or mobile devices can click a "buy" button to make purchases through advertisements or other posts on the world's largest social network, the Menlo Park, California-based company said Thursday in a blog post.

    July 18, 2014

  • Microsoft cutting 18,000 jobs, signals new path

    Microsoft announced the biggest layoffs in its history Thursday, saying it will cut 18,000 jobs or 14 percent of its workforce as it streamlines its Nokia mobile device business to focus on using the Windows Phone operating system.

    July 17, 2014

  • web_starbucks-cof_big_ce.jpg Starbucks sees more Apple-like stores after Colombia debut

    This week Starbucks opened its first location in Colombia — a 2,700-square-foot store with a heated patio, concrete columns, mirrors on the ceiling and walls of colorful plants.

    July 17, 2014 1 Photo

  • Rejected Time Warner bid by Fox shows growth mood NEW YORK (AP) — In a move that aims to counter consolidation among TV distributors, Rupert Murdoch’s Fox has made an unsolicited takeover offer for rival media giant Time Warner for about $76 billion in cash and stock.Time Warner rejected the bid, wh

    July 17, 2014

  • What happens to your online accounts when you die?

    You've probably decided who gets the house or that family heirloom up in the attic when you die. But what about your email account and all those photos stored online?

    July 16, 2014

  • Screen Shot 2014-07-16 at 11.16.48 AM.png VIDEO: Comcast apologizes after customer service call goes viral

    Comcast issued an apology after one of its representatives kept a customer captive on the phone for nearly 20 minutes, demanding to know why he was choosing another cable provider.

    July 16, 2014 1 Photo

Facebook