US stock surge follows global rally after central bank moves

Thursday, November 4, 2010

NEW YORK - US stocks surged Thursday, following the lead of global markets as investors digested a series of central bank moves to boost sagging economies.

The US and European monetary authorities took opposite approaches to their economies in the last two days, with the Federal Reserve opting for a $600-billion buy-up of long-term government debt, while the European Central Bank ruling out any monetary intervention.

Yet stocks in the US, Europe and Asia rose sharply Thursday, with Wall Street investors also reacting to Fed Chairman Ben Bernanke’s defence of the US approach in a Washington Post editorial.

Bernanke said the US “could hardly be satisfied” with the pace of recovery in the world’s largest economy and said concerns that the Treasury purchases could drive up inflation were “overstated”.

The blue-chip Dow Jones Industrial Average jumped 219.71 points, or 1.96 percent, to 11434.84. The broader Standard and Poor’s 500 index surged 23.1 points, or 1.93 percent 1,221.06. The technology-heavy Nasdaq Composite Index climbed 37.07 points, or 1.46 percent, to 2,577.34.

The Fed’s action drove the dollar down against nearly all major global currencies. The US currency fell against the euro to 70.42 euro cents from 70.76 euro cents Tuesday. The dollar dropped against the Japanese currency to 80.76 yen from 81.16 yen.

Investors were awaiting Friday’s release of monthly unemployment figures in the US, where the jobless rate is currently 9.6 percent. Weekly claims for jobless benefits rose slightly, according to government data released Thursday.

Filed under: Economy

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