Exchange traded funds indexed to the S&P 500 rallied above their 50-day and 200-day exponential moving averages on Wednesday as central bank liquidity and upbeat economic data lit a fire under U.S. stocks.
SPDR S&P 500 ETF (NYSEArca: SPY) and iShares S&P 500 (NYSEArca: IVV) were up more than 3% in morning trade. It was an extreme advancing day as up volume accounted for 98% of NYSE trading activity.
Global markets surged Wednesday after the Federal Reserve said it is coordinating with other central bank to pump more dollars into the financial system in a bid to ease funding pressures on European banks. [Global Stock ETFs in Rally Mode on Central Bank Moves]
Also lifting the mood was China cutting the reserve requirement ratio for its banks, which should free them up to lend more and boost the economy.
Finally, several positive data points on the economy released Wednesday helped push the Dow Jones Industrial Average higher by over 400 points. The Dow is now in positive territory for 2011 but S&P 500 ETFs remain in the red year to date.