Stock exchange traded funds (ETFs) across the board closed higher after Federal Reserve Chairman Ben Bernanke said central bank officials expect the economy to continue recovering this year as the jobs market strengthens.
- Federal Reserve Chairman Ben Bernanke on Wednesday used his first-ever press conference after an interest rate decision to say the central bank will keep buying bonds as their securities portfolio matures, but won’t start a third round of large-scale purchases because inflation has picked up. Bernanke was speaking after the Fed left its key interest rate at historically low levels and stuck to its $600 billion bond-buying program. The Fed also hiked its 2011 inflation view to a level between 2.1% and 2.8% — implicitly acknowledging that prices are running faster than the 1.7% to 2% range the Fed considers to be “mandate consistent.” While defending the success of the $600 billion bond purchase program, Bernanke spoke against the possibility of a third round of quantitative easing, saying the trade-offs are “getting less attractive at this point.” The ProShares UltraShort 20+ Year Treasury ETF (NYSEArca: TBT) surged almost 2% higher on Wednesday.
- Crude-oil futures settled higher on Wednesday, gathering steam after the U.S. Federal Reserve signaled no change in its monetary policy, said the spike in inflation will be temporary, and that the economic recovery is proceeding at a moderate pace. Prices had traded earlier lower after a government report showed a larger-than-expected increase in inventories and the U.S. dollar rose. Prices had reeled after the Energy Information Administration reported an increase of 6.2 million barrels in U.S. inventories of crude during the week ended April 22. The EIA also showed a decrease of 2.5 million barrels for gasoline stockpiles, and a decrease of 1.8 million barrels for distillate inventories. The analysts surveyed by Platts had expected a decline of 1.5 million barrels for gasoline stocks and an increase of 650,000 for distillates, which include heating oil and diesel. Gasoline futures rose sharply on the news of diminished supplies. The ProShares Ultra Oil & Gas ETF (NYSEArca: DIG) closed flat today.
- The unemployment rate fell last month in more than 80 percent of the nation’s largest metro areas, adding to evidence that the recent pickup in hiring is widespread. The unemployment rate fell in 303 of the nation’s 372 largest cities in March, the Labor Department said Wednesday. That’s up from the more than the 287 cities that reported a drop the previous month and the best showing since September. The rate rose in 43 cities and was unchanged in 26. Nationwide, the unemployment rate dipped to a two-year low of 8.8 percent in March and has dropped a full percentage point since November. Businesses added a net total of more than 200,000 jobs in March and February, the fastest two-month hiring spree in five years. “Clearly, the economic recovery is broadening across the country,” Steve Cochrane, a regional economist at Moody’s Analytics, said. “We’re still seeing some pretty good improvement in unemployment rates in the industrial Midwest.” The SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) ended Wednesday almost 1% higher.
Gregory A. Clay contributed to this article.
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