Wall Street rallies on Fed stimulus plan

Updated: 2010-11-05 13

(Xinhua)

NEW YORK - Wall Street rallied on Thursday as market sentiment was buoyed by the Federal Reserve's stimulus plan.

The Fed said in its statement on Wednesday that it will purchase a total of $600 billion in long-term US bonds, $75 billion per month, by the end of second quarter of 2011, hoping to prop up the sluggish recovery.

However, the new policy is widely questioned. Many economists doubt about the policy's effectiveness and worry about its spillover effect on the rest of the world.

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The greenback continued its decline against other currencies on the Fed's plan, pushing commodity prices higher. Light, sweet crude for December delivery rose $1.80 to close at $86.49 a barrel on the New York Mercantile Exchange.

The Labor Department said Thursday that the number of people filing for unemployment benefits rose 20,000 to a seasonally adjusted 457,000 for the week ended Oct 30, which was a bigger jump than analysts had expected.

Sales from major retailers came in much stronger than expected, giving stocks another boost as investors were hoping consumer spending, which accounted for about 70 percent of US economy, finally picked up.

The massive bond-buying program, known as QE2, pushed the Dow Jones average to a fresh two-year high.

The Dow Jones industrial average rose 219.71, or 1.96 percent, to 11,434.84. The Standard & Poor's 500 index gained 23.09 points, or 1.93 percent, to 1,221.05 and the Nasdaq was up 37.07 points, or 1.46 percent, to 2,577.34.