The stock markets in the United States surged to a new record high after the Federal Reserve surprisingly maintained its $85 billion quantitative easing (QE) per month. The majority of economists anticipated that policy makers would taper the central banks monthly bond buying activity by $10 billion to $75 billion starting this month.
Today, the Federal Open Market Committee (FOMC) said, “The Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.” The FOMC estimated that the economy will grow by 2.5 percent to 3.3 percent by 2016. They projected that the unemployment rate would decline to around 5.4 percent to 5.9 percent, and the inflation rate at between 1.7 percent to 2 percent.
During a press conference, Federal Reserve Chairman Ben Bernanke emphasized that the bond buying program of the central bank depends on data. According to him, the Feds might taper if data shows continued improvement.
Bernanke said, “The general framework in which we’re operating is still the same. We have a three-part baseline projection including growth that’s picking up over time, fiscal drag is falling, and continuing gains in the labor market. We will be looking to see if the data confirm that basic outlook.If it does, we’ll take the first step at some point, possibly later this year, and continue so long as the data are consistent with that continued progress. Asset purchases are not on a preset course. They are conditional on the data.”
Double Line Capital’s Jeffrey Gundlach commented, “Once stimulus removal begins, it cannot be quickly reversed, and the Fed is afraid to let the economy try to make it on its own.”
U.S. Markets
- Dow Jones Industrial Average (DJIA)- 15,676 (+0.95%)
- S&P 500- 1,725 (+1.22%)
- NASDAQ- 3,783 (+1.01%)
- Russell 2000- 1,076 (+0.92%)
European Markets
- EURO STOXX 50 Price EUR- 2, 908 (+0.62%)
- FTSE 100 Index- 6,558 (-0.17%)
- Deutsche Borse AG German Stock Index DAX- 8,636 (+0.45%)
Asia Pacific Markets
- Nikkei 225- 14, 504 (+1.35%)
- Hong Kong Hang Seng Index- 23, 117 (-0.27%)
- Shanghai Shenzhen CSI 300 Index- 2, 432 (+0.21%)
Stocks In Focus
The stock price of Adobe Systems Incorporated (NASDAQ:ADBE) climbed by more than 9 percent to $52.58 per share after the company reported that its online services is growing. The company said its Creative Cloud Business has 1.03 million paid subscribers, an increase of 47 percent, or 331,000 subscribers. According to Al Hilwa, analyst at IDC, Adobe is “hitting out of the ballpark” in terms of expanding its cloud subscriber base.
FedEx Corporation (NYSE:FDX) gained as by more than 5 percent to $116.25 per share after delivering a 7 percent increase in quarterly profit. The company posted $489 million profit, or $1.53 earnings per share. The company projected that the economy will continue to grow at a modest rate and indicated that its shipping rates both domestic and internal will increase by 3.9 percent starting January 6.
The stock price of Alcoa Inc (NYSE:AA) increased by more than 3.5 percent to 8.56 per share on reports that the company significantly reduced its production in the United States due to weak pricing of aluminum.
Priceline.com Inc (NASDAQ:PCLN) surged to as much as $1,001 per share today. The stock closed at around $995.09, up by 2.56 percent. The value of the stock rose by 60 percent this year.
