Stocks rally ahead of Fed decision

The Federal Reserve may say interest rates will remain low for at least 2 years. The Dow and S&P 500 enjoy their 5th straight gains. An Apple rally that began Monday boosts the Nasdaq. Dollar General's caution hurt discount retailers.

By Charley Blaine Dec 11, 2012 6:18PM
Stocks moved higher Tuesday with the Dow Jones industrials ($INDU) and the Standard & Poor's 500 Index ($INX) each rising for a fifth straight day thanks to a big rally in technology stocks, but hopes for a resolution of the fiscal cliff crisis faded in the afternoon and trimmed the market's gains.

Apple (AAPL) was one of the main fuels for the rally, rising $11.42 to $541.24. On Monday, the shares dropped to as low as $521.58 in the morning but rebounded a bit in the afternoon. The rebound continued Tuesday.

Apple's surge pushed the Nasdaq Composite Index ($COMPX) to its biggest one-day gain in more than two weeks, and the index moved into positive territory for December. The technology sector of the S&P 500 was the index's strongest.

The Dow closed up 79 points to 13,248. The S&P 500 was up 9 points to 1,428, and the Nasdaq added 35 points to 3,022, its first close above 3,000 since Dec. 3. The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, was up 35 points to 2,682.
In addition, expectations that the Federal Reserve will affirm its commitment to support the economy in the event budget talks fail also was a factor. The Fed will announce its policy for the next two months on Wednesday.

The Fed is widely expected to reconfirm its expectation that interest rates will remain at ultra-low levels until mid-2015.

It is also expected to announce it is converting a program popularly known as Operation Twist into a broader bond-buying program that the media will call QE 4.

QE is short for quantitative easing, which essentially means the Fed buys outstanding government debt, helping to keep rates low. The bond-buying program, the Fed's 4th since the 2008-2009 market crash, have been the central bank's main tools for keeping rates low.

Twenty-six of the 30 Dow stocks were higher, along with 367 S&P 500 stocks and 82 Nasdaq-100 stocks.

In addition to Apple's gain, a number of big tech companies saw shares rise nicely, including Research In Motion (RIMM), Texas Instruments (TXN), Google (GOOG), Intel (INTC) and Amazon.com (AMZN).

Discount retailers were hurt by a note of caution about the holiday shopping season from Dollar General (DG), which was off $3.63 to $42.90.  The company was worried about  intensifying competition this holiday shopping season.

Family Dollar Stores (FDO) fell $5.90 to $64.68 while Dollar Tree (DLTR) fell $1.46 to $37.98.

Wal-Mart Stores (WMT) was off $1.26 to $70.89 and was the weakest of the 30 stocks. Target (TGT) dropped 53 cents to $61.43.

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11Comments
Dec 11, 2012 7:28PM
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It will be interesting to see the market impact of QE4.  The law of diminishing returns is kicking in and even the insiders aren't trusting each other to continue running the market up.  Eventually, Congress has to do SOMETHING to reestablish some firm footing under this economy.  It's built on Fed money right now and that can't go on forever.

 

Why not pass a law that everything in Walmart has to be US made?  Watch the factories go up and the jobs come back.   Screw trickledown, we need a firehose! 

Dec 11, 2012 8:30PM
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The cruelest tax of all to the poor is inflation. Did President Gerald Ford say that after President Carter's monetary inflation got too high?  Maybe the Feds should think of that? After all,  those of us who were invested in the Dot Coms that lost a million or more went off the financial cliff. The Feds watched us crash. We worked hard for our money, paid taxes, social security, medicare and invested. Some of us are already experienced going over the financial cliff and survived with out all these entitlement welfare benefits. If money becomes worthless then all loose. Rich, middle and poor. Don't forget China who holds too many of our bonds.
Dec 11, 2012 9:33PM
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Hey FED

I am FED UP

 

Get the Hell out of our lives

Dec 11, 2012 9:21PM
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Does the fed realize that keeping interest rates low is now entering the funding reversal effect?

Capital aggregators like mutual funds and pensions are withdrawing from private fixed income because they can get 1% risk free from the treasury.  The printing press is crowding out private investment in enterprise and causing MALINVESTMENT in hard assets and government securities.  This does not help the economy.

End the Fed and some other regulations and let markets get the rates optimized.  No government policy has ever or could ever match the aggregate wisdom of markets over time.

Dec 11, 2012 11:11PM
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the fiscal cliff will never be fixed. Liberals have up everything. This is a free society now. Everything gets handed to you at the cost of your entire paycheck. Liberalism is a mental disorder.
Dec 12, 2012 1:42AM
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Didn't we just have QE3 just a month or so ago? QE4 so soon? The FED creates jobs? Ha. Ha. Ha. Does the FED printing all this money going to cause a proportional backlash in inflation? You bet. You never get something for nothing. Do you?
Dec 12, 2012 9:13AM
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"Didn't we just have QE3 just a month or so ago? QE4 so soon?"

 

Yep. Get a copy of: Fiat Money Inflation in France by Andrew Dickson White. He compiled it in 1876 and read it to both parties in Congress. It's about Inflationists and the French Revolution Era.  

Dec 12, 2012 9:09AM
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Interesting... today is 12 12 12. If the Federal Reserve decides it will buy bonds again and fund it's member banks with more fiat currency, today marks the trigger day that collapses America. We have no possible way to recover if we can't stop our currency from dissolving. Dollars in the markets are not coursing through our economy. If they were, we would be seeing lift on Main Street. All I see on Main Street are For Lease signs. A reminder that every purchase at a Big Box is swept out of your city to home offices. The more you buy, the faster we die.
Dec 12, 2012 11:13AM
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Life is great!

 

Chris Van Hollen & Elizabeth Warren in 2016 & 2020!

 

God bless Mom & Pop stores!

 

God bless unions and living wages!

 

DIE big and unregulated corporations and DIE Ayn Rand Capitalism, DIE!

 

God bless America!

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