Wall Street cheers Fed's decision

Indices stay strong with no new surprises from Fed

With no new surprises from the Federal Reserve, US stocks were pushed higher on Tuesday, 16 March 2010, with support from the financial sector as Fed hinted at keeping interest rates low for an extended period of time. Economic data for the day that checked in were mixed in nature. The dollar slipped considerably.

At the end of the day on Tuesday, the Dow Jones Industrial Average ended higher by 43.83 points at 10685.98. Nasdaq ended higher by 15.8 points at 2378.01. S&P 500 ended higher by 8.95 points at 1159.56. Dow opened 6 points lower earlier during the day.

All ten economic sectors ended higher for the day led by the materials, financials, and industrial sectors.

Among major Dow components, Boeing shares dropped as news came that Air Berlin canceled some $1.7 billion worth of firm orders for the 787 Dreamliner. Home Depot also fell due to the worse than expected housing data.

Intel rallied 3% after the chipmaker officially launched its new Xeon chip. General Electric rose 2.8% after its chief financial officer said the conglomerate expects to raise its dividend next year.

During mid day trading, the dollar's decline provided a boon for the broader market in the face of uncertainty ahead of the FOMC statement. Stocks extended their gains from the past few weeks to hit fresh highs for the year. Materials stocks benefited most from this session's advance. Strength among commodities has also helped basic materials stocks. Health care stocks were the only sector to trade in the red.

The latest FOMC policy statement that came out today was little changed from previous directives. The Fed has left its target federal funds rate unchanged at a range of 0.00% to 0.25% and the Fed said that it continues to expect an exceptionally low level for an extended period.

After this, the financial sectors received an extra boost with major support from Citigroup thereby taking stocks higher.

In the currency market on Tuesday, the dollar index slipped by almost 0.6% following Fed's comments.

In other economic news, investors were relieved to see U.S. import prices last month post their first monthly drop since July, reducing the specter of inflationary pressures. But housing starts declined more than expected - a reminder that the U.S. real-estate market remains under pressure.

The Labor Department said the price of imports declined 0.3% in February, the first drop in seven months. Separately, the Commerce Department reported that new-home construction fell 5.9% to a seasonally adjusted annual rate of 575,000. The January count was revised up to a pace of 622,000 units.

Crude prices ended higher on Tuesday, 16 March 2010. Prices rose as the dollar slipped following comments from Federal Open Market Committee, which hit the wires in the noon hours. On Tuesday, crude-oil futures for light sweet crude for April delivery closed at $81.7/barrel (higher by $1.9 or 2.3%). During intra day trading, it rose to a high of $82.09. Prices lost 0.4% last week.

Barring WNS, all Indian ADRs ended higher on Tuesday. ICICI Bank and Tata Motors were the main winners gaining 2.5% and 2% respectively.