Wall Street rose to a new all-time high today after the Federal Reserve surprised investors and said it would not cut its bond-buying program, which helps support the economic recovery with lower interest rates.
The Fed, led by chairman Ben S. Bernanke, was widely expected to pull back on its $85 billion a month program to buy mortgage-backed securities and Treasury debt. The pause is good news for investors, who love low interest rates, but also a sign that the economy is not as strong as recently hoped.
The S&P Retail Index jumped 1.8 percent, or 14.75 points, to 857.16 and the Dow Jones Industrial Average increased 1 percent, or 147.21 points, to 15,676.94. Both indices closed above their previous all-time highs, set in early August.
Among the gainers in the fashion set were Lululemon Athletica Inc., up 6 percent to $74.46; Tumi Holdings Inc., 5.8 percent to $21.89; PVH Corp., 3 percent to $126.44; Amazon.com Inc., 2.6 percent to $312.03, and Avon Products Inc., 2.4 percent to $21.81.
The Fed’s committee on monetary policy acknowledged the impact of cutbacks in the federal government, but said general economic activity and the labor market pointed to “growing underlying strength in the broader economy.” But the committee said it “decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.”
In Europe, markets were mostly up as investors awaited the outcome of the Fed’s two-day meeting. The CAC 40 in Paris was up 0.6 percent to 4,170.40 as Frankfurt’s DAX increased 0.5 percent to 8,636.06, Milan’s FTSE MIB gained 0.3 percent to 17,804.70.
London’s FTSE 100 in London lost 0.2 percent to 6,558.82.
The pound traded at $1.59 against the dollar, while the euro fetched $1.33.
Retail and luxury stocks had a mixed day, with the strongest gainers including Safilo, up 4.5 percent to 14.82 euros; LVMH Moët Hennessy Louis Vuitton, 1.5 percent to 145.80 euros, and Inditex which gained 0.8 percent to 111.10 euros, after it said first-half net profit climbed 0.7 percent to 951 million euros, or $1.25 billion.