US stocks surge on central bank’s bold actions

March 19th, 2009 - 6:22 am ICT by IANS  

New York, March 19 (DPA) US stocks rallied Wednesday, posting their sixth gain in seven days after the Federal Reserve announced a new series of aggressive moves to shore up the US financial sector.
The Fed said it would buy $300 billion in long-term government bonds, an unprecedented effort to help drive investors back into the private sector, and will purchase another $750 billion in troubled mortgage-backed securities at the heart of the financial crisis.

Yields on 10-year Treasury securities tumbled 0.5 percentage points to 2.5 percent, the fastest decline since 1962. The dollar also plummeted against other major currencies on the Fed’s announcement.

The US currency tumbled against the euro to 74.2 euro cents from 76.85 euro cents on Tuesday, its biggest drop since 2000, and fell to 96.22 Japanese yen from 98.25 yen.

The central bank kept its benchmark interest rate at a record low of zero to 0.25 percentage points and said that the federal funds rate would have to remain there for an “extended period” as the United States works its way out of a deep recession.

The Federal Reserve in a statement promised to use “all available tools” to stem an economic crisis that has cost at least 4.4 million jobs in the United States since the recession began in December 2007.

The blue-chip Dow Jones Industrial Average jumped 90.88 points, or 1.23 percent, to 7,486.58. The broader Standard & Poor’s 500 Index surged 16.23 points, or 2.09 percent, to 794.35. The technology-heavy Nasdaq Composite Index earned 29.11 points, or 1.99 percent, to 1,491.22.

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