Stocks traded up sharply early in the day before suffering a slight slip in the late morning. However, the major indices managed to hold their gains after news that the Federal Reserve intends to give public updates four times a year on how long it intends to keep interest rates at near record lows with the first such forecast coming on Jan. 24-25.
Markets Buoyed by News of Disclosures
The Dow Jones Industrial Average, S&P 500, and Nasdaq all posted gains of around 2 percent in early trading only to slide off, but the Fed's announcement has helped hold early gains, with gains hovering near 1.7 percent for all three major indices. The news about the Fed's plans to make their forecasts public was contained in the minutes from the most recent meeting of the Federal Open Market Committee on Dec. 12.
The forecast due out later this month will include forecasts for the fourth quarter of 2012 as well as the next few calendar years and will be updated four times a year. Interest rates have been near 0 percent since 2008, and last month federal officials stated that economic conditions would likely call for “exceptionally low levels for the federal funds rate at least through mid-2013.”
The move to make the Fed's forecasts public appears to be part of an effort to keep investors better informed as to the Fed's future moves as the minutes stated that “A number of members indicated that current and prospective economic conditions could well warrant additional policy accommodation." The same members further concluded that “any additional actions would be more effective if accompanied by enhanced communication” about the FOMC’s economic goals in the longer term and policy framework.
Banks Among Biggest Gainers
Among the days biggest gainers were some of the country's biggest banks. Citigroup (C) jumped over 8 percent, Morgan Stanley (MS) joined it with a gain exceeding 7 percent, and Goldman Sachs (GS) leapt over 6 percent. JP Morgan (JPM) and embattled Bank of America (BAC) joined the party with gains over 5 percent.
European banks also had a red-letter day. Barclays (BCS) saw gains approaching 6 percent, Deutsche Bank (DB) jumped over 5.5 percent, and ING Groep (ING), Lloyds (LYG), and Credit Suisse (CS) were all up over 5 percent.
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