Article – BusinessDesk
Oct 10 (BusinessDesk) US stocks held on to earlier gains as minutes from the latest US Federal Reserve meeting showed that most policy makers believe the central bank should start tapering its bond-buying program before the end of the year.
While you were sleeping: Fed to taper in 2013
Oct 10 (BusinessDesk) – US stocks held on to earlier gains as minutes from the latest US Federal Reserve meeting showed that most policy makers believe the central bank should start tapering its bond-buying program before the end of the year.
Meanwhile, President Barack Obama was set to nominate Janet Yellen, currently vice chairman of the Fed, to succeed Ben Bernanke early next year, providing comfort that US monetary policy will stay on its accommodative course.
Obama is expected to announce the nomination of Yellen today. Bernanke’s term expires on January 31.
“The markets are finding consolation in Yellen’s expected nomination because that at least puts the monetary policy on a more certain, or at least a more familiar path,” Anastasia Amoroso, global market strategist at JP Morgan Funds in New York, told Reuters. “It does remove another hurdle, another piece of the puzzle, another piece of uncertainty that the market likes to see resolved.”
In afternoon trading in New York, the Dow Jones Industrial Average advanced 0.33 percent, while the Standard & Poor’s 500 Index added 0.10 percent. The Nasdaq Composite Index fell 0.41 percent.
Gains in AT&T and Nike helped lift the Dow, up 2.9 percent and 1.4 percent respectively. Merck and Chevron were the Dow’s biggest decliners, down 0.9 percent and 0.7 percent.
The CBOE Volatility index, Wall Street’s so-called fear gauge, dropped 3.6 percent to 19.60.
“Yellen is an excellent choice,” Charles Schumer of New York, the Senate’s No. 3 Democrat, said via Twitter. “I believe she’ll be confirmed by a wide margin.”
Separately, the minutes of the latest Fed meeting showed that most policy makers support easing its bond-buying program this year.
“Conditional on their respective outlooks, most participants judged that it would likely be appropriate to begin to reduce the pace of the Committee’s purchases of longer-term securities this year and to conclude purchases in the middle of 2014,” according to minutes from the September 17-18 FOMC meeting released today.
“A couple of participants thought it appropriate for the first reduction in the pace of asset purchases to occur later, and another specified that purchases likely would continue past midyear 2014; in contrast, a couple of participants thought that the program should be ended considerably sooner than the middle of next year,” the minutes showed.
Shares of Alcoa jumped 4.1 percent after the aluminum producer produced results that surpassed expectations.
“You see the increased importance of the downstream business and the continued growth and profitability,” Chairman and Chief Executive Officer Klaus Kleinfeld told Bloomberg News on Tuesday. “The share price is undervalued and has not built in the repositioning that we are undergoing but I believe it will get there.”
In Europe, the Stoxx 600 Index closed 0.6 percent lower from the previous close. France’s CAC 40 slipped 0.2 percent, Germany’s DAX slid 0.5 percent, and the UK’s FTSE 100 fell 0.4 percent.