Fed action, oil-price slide fuel stock rally

By Michael J. Martinez
The Associated Press

NEW YORK - The Standard & Poor's 500 index reached its highest close since the Sept. 11, 2001, terrorist attacks yesterday as stocks surged on the Federal Reserve's upbeat assessment of the economy and a sharp drop in oil prices.

The Dow Jones industrial average rose 84.36 to 10,469.84, its best closing since June 23.

Microsoft, one of the 30 Dow stocks, added 25 cents to close at $29.98 a share. Boeing, also a Dow stock, gained 90 cents to $54.30.

Other stock indicators also rose substantially. The S&P 500 was up 10.57 to 1,173.48, its best showing since Aug. 27, 2001.The Nasdaq composite index gained 26.71, or 1.31 percent, to 2,061.27. The Nasdaq last closed above that April 12.

Continuing a rally that started before the presidential election, Wall Street enjoyed impressive gains after Wednesday's Fed policy statement, which outlined an improving labor market and little danger of inflation. The Fed raised the benchmark interest rate a quarter percentage point to 2 percent, as expected.

Falling oil prices also spurred buyers. A barrel of light crude was quoted at $47.42, down $1.44, on the New York Mercantile Exchange.

Despite the solid advance, trading was muted somewhat as the bond markets closed for the Veterans Day holiday. Bonds can have an impact on stock trading, and some analysts questioned whether yesterday's rally would set the stage for further highs.

"You have to take today's action with a grain of salt, what with bonds not trading today, but sure, it's nice to see things moving up," said Bryan Piskorowski, market analyst at Wachovia Securities. "But really, with the jobs report last week and the Fed move, the market's still treading water, and we're going to need another catalyst to break out higher."

After three days of minimal moves, the major indexes saw a resurgence of the rally first spurred by a relatively smooth presidential election, a better-than-expected jobs report and continuing drops in crude-oil futures. November and December are also traditionally the strongest months for the stock market.

Despite gains, the volume of shares traded dropped from recent sessions, and analysts said many investors were waiting to see whether there would be a selloff based on profit taking or whether stocks would rise.

"I see a lot of people waiting for a normal retracement before they enter back into this market, but the market sometimes will do something just to confound as many people as it can," said Bill Groenveld, head trader at vFinance Investments. "We're definitely in a buyer's market, and either way it goes, people are staying in and watching things pretty close with their finger on the trigger."

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