Stocks Close Week Higher on QE3 Confidence
NEW YORK (TheStreet) -- The major U.S. equity averages finished with solid gains Friday, capping a stellar week as the risk-on trade flourished thanks to the bold stimulus plan outlined by the Federal Reserve.
The central bank chose Thursday to go on the offensive, unveiling an open-ended program to buy $40 billion worth of mortgage-backed securities per month until the job market strengthens, pushing its pledge to keep its zero interest rate policy into at least mid-2015, and maintaining its current bond maturity extension efforts through the end of this year.
A surprise leap in consumer confidence for September despite higher gasoline prices was also helping investor sentiment on Friday. Bonds were hammered, the dollar skidded and gold ticked up as traders repositioned in the wake of Fed Chairman Ben Bernanke's promise to stick with a highly accommodative monetary policy even after the U.S. economy starts to strengthen.
The Dow Jones Industrial Average rose more than 54 points, or 0.40%, to close at 13,593. The blue-chip index finished the week up 2.15%, booking a gain for the eighth time in the last 10 weeks and sixth time in the last seven sessions. Year-to-date, the Dow is now up 11.26%.
Home Depot (HD) was also a standout gainer after the Atlanta-based home improvement products retailer said it plans to close its seven remaining big box stores in China and cut 850 jobs. The stock gained 2%.