U.S. stocks rose for a third straight week, with the Standard & Poor’s 500-stock index touching a record, after the Fed surprised investors by deciding not to slow monetary stimulus.
The S&P 500 advanced 1.3 percent to 1709.91 over the five days. The benchmark index has advanced 4.7 percent in September, rebounding from the biggest monthly drop since May 2012. The Dow Jones industrial average increased 75.03 points, or 0.5 percent, to 15,451.09. Both gauges on Sept. 18 surpassed their previous records set Aug. 2.
“This week was good news for the people who wanted to keep the spigot open,” said Tim Hartzell, who helps manage about $425 million at Sequent Asset Management. “The underlying data is not as robust as what many thought and may turn weaker despite five years of easy money.”
Stocks rallied as the Fed unexpectedly refrained from reducing its $85 billion in monthly asset purchases, saying it wants more evidence of an economic recovery. The decision emboldened bulls who have enjoyed a 153 percent rally in the S&P 500 since stimulus began five years ago.
Equities slumped the most since August on the final day of the week as Fed Bank of St. Louis President James Bullard said a small tapering of bond buying is possible next month, and concern grew about political brinkmanship over federal spending.
The Treasury will sell $30 billion in three-month bills and $25 billion in six-month bills Monday. They yielded 0.020 percent and 0.050 percent in when-issued trading. The government will also sell $33 billion in two-year notes, $35 billion in five-year securities and $29 billion of seven-year notes next week.
— Bloomberg News