The Federal Reserve said the economy continued to strengthen modestly in the third quarter, but the central bank took some of the steam out of a Wall Street rally when it laid out no new steps to help that recovery along.

 

The S&P Retail Index, which was up 1.8 percent earlier in the day, was up 1.2 percent, or 6.44 points, to 534.24 with an hour left in trading. The Dow Jones Industrial Average rose 1.6 percent, or 182.81 points, to 11,840.77. Shares of Kenneth Cole Productions Inc. gained 7.6 percent to $11.15 following better third-quarter profits. Also perking up were Aéropostale Inc., ahead 3.8 percent to $14.09; Guess Inc., 3.4 percent to $32.61, and Saks Inc., 2.9 percent to $10.86.

 

The Fed’s open market committee, which sets monetary policy and is led by chairman Ben S. Bernanke, acknowledged that it “continues to expect a moderate pace of economic growth over coming quarters and consequently anticipates that the unemployment rate will decline only gradually…. Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets.”

 

In Europe, where the broad plan to alleviate the debt crisis now awaits the approval of a Greek referendum, major stock markets gained ground.

 

Frankfurt’s DAX and Milan’s FTSE MIB led the upswing, each closing up 2.3 percent. Paris’ CAC 40 rose 1.4 percent, followed by London’s FTSE 100, which climbed 1.2 percent.

 

The markets had had a rough ride earlier this week, falling sharply on the unexpected news that the Greek people would vote on the package to stem the region’s debt crisis in December or January. In mid-morning, markets were broadly flat.

 

Germany and France were set to hold talks with Greece ahead of a G20 summit in Cannes that will begin Thursday. If the Greek people vote against the latest bailout measures, it will lead to a debt default that could hurt countries worldwide.

 

Retail and luxury stocks in Europe were mixed at the day’s close, with the biggest gainers including Arcandor, which rocketed up 20 percent; Burberry, which climbed 5.7 percent, and Hermes, which advanced 5.2 percent. Among those losing ground were Inditex, which fell 1.2 percent, and Mulberry Group, which tumbled 1.7 percent.

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