Sam Collins

Commit More Cash on Pullbacks

    Tweet This

Free Trading Guides

The Fed's latest move to keep interest rates low was greeted warmly by investors yesterday, but it was their comment that "economic activity is leveling out" that turned the market as hot as the temperature outside at Broad and Wall streets.

The Fed went on to say that they "expect inflation to be remain subdued for some time, and economic activity is likely to remain weak for some time." They further stated that they would end purchases of long-dated Treasury bonds in October, where traders had thought the cycle of buying would end in September.

The supporting statement by the Fed apparently was just what investors wanted to hear, and they responded by buying back many of the financial stocks that were hit hard in the last couple of sessions.

Financial stocks gained 2%, with insurers among the leaders, with Genworth Financial (GNW) up 5.94% and Hartford Financial (HIG) up 7.14%.

Industrials gained as well, with United Technologies (UTX) up 4.3% and Caterpillar (CAT) up 2.81%. Applied Materials (AMAT) rose 3.33%, and Cree (CREE) was up 6.94%, both on better earnings. And Cree got an extra boost from an upgrade by Merrill Lynch.

At the closing bell, the Dow Jones Industrial Average (DJI) was up 120 points to 9,362, the S&P 500 (SPX) gained 11 points to 1,006, and the Nasdaq (NASD) rose 29 points to 1,999.

The NYSE traded 1.3 billion shares with advancers ahead of decliners by just under 3-to-1. On the Nasdaq, 688 million shares traded with advancers there ahead by 5-to-2.